UTI Asset Management Company (UTI AMC), the oldest AMC of the country is coming out with an IPO on Sept 29, 2020. Here’s all the details you need to know like Price band, Date, Minimum lot size, etc
IPO Details
| UTI AMC IPO DETAILS | |
| IPO Date | Sep 29, 2020 – Oct 1, 2020 |
| Issue Type | Book Built Issue IPO |
| Issue Size | 38,987,081 Eq Shares of ₹10 |
| (aggregating up to ₹2,159.88 Cr) | |
| Face Value | ₹10 per equity share |
| IPO Price | ₹552 to ₹554 per equity share |
| Market Lot | 27 Shares |
| Min Order Quantity | 27 Shares |
| Listing At | BSE, NSE |
| Bid/Offer Opens On | Sep 29, 2020 |
| Bid/Offer Closes On | Oct 1, 2020 |
| Finalisation of Basis of Allotment | Oct 7, 2020 |
| Initiation of Refunds | Oct 8, 2020 |
| Credit of Shares to Demat Acct | Oct 9, 2020 |
| IPO Shares Listing Date | Oct 12, 2020 |
| UTI AMC IPO Lot Size and Price (Retail) | |||
| Application | Lots | Shares | Amount (Cut-off) |
| Minimum | 1 | 27 | ₹ 14,958 |
| Maximum | 13 | 351 | ₹ 194,454 |
| UTI IPO Shares Offered by Investor Category | ||
| Category | Share (%) | No. of shares |
| QIB | 50.00 | 19,493,540 |
| NII | 15.00 | 5,848,062 |
| Retail | 35.00 | 13,645,480 |
| Total | 38,987,081 | |
Company & Business
- UTI is the oldest AMC in India with more than 55 years of operation
- 2nd largest AMC – total AUM Rs. 9,70,600 Cr.
- 8th largest AMC – MF AUM Rs. 1,33,600 Cr.
- 1.09 Cr. folios – 12.2% of MF industry
- Businesses
- Domestic Mutual Funds
- Portfolio Management Services (HNIs & Institutions including government institutions which gives them a good revenue)
- Pension Fund Management (NPS)
- Offshore funds
- Alternative Investment Funds
- Wide Distribution Network
- 163 UTI Financial Centers
- 257 Business Development Associates & Chief Agents
- 53,000 independent financial advisors (IFAs)
- Banks & Distributors
- International offices in London, Dubai, Guernsey & Singapore
- Management Fees – 72.7% of revenue
Promoters & Shareholding
Pre-offer shareholding |
||
| Shareholders | Number of equity shares | % of the equity share capital |
| SBI | 23,125,000 | 18.24 |
| LIC | 23,125,000 | 18.24 |
| BOB | 23,125,000 | 18.24 |
| PNB | 23,125,000 | 18.24 |
| TRP (T. Rowe Price) | 32,964,686 | 26.00 |
| Others (Employees) | 1,318,587 | 1.04 |
| Total | 126,783,273 | 100.00 |
About the issue
The IPO comprises sale of 3,89,87,081 equity shares, or 30.75 per cent, stake by existing shareholders. State Bank of India (SBI), Life Insurance Corporation (LIC) and Bank of Baroda are offering to sell 1,04,59,949 shares each, while Punjab National Bank (PNB) and T Rowe Price International are going to offload 38,03,617 shares each.
Objective of the offer
- This is more of an offer for sale – which means that the money will go to existing shareholder’s pocket and does not include any fresh issue.
- Enhance the company’s brand name
- Create a public market for its equity shares in India
Financials (Restated) (in Rs. Million)
| Particulars | Q1 2020 | Financial Year | ||
| 2020 | 2019 | 2018 | ||
| Total Assets | 32,634.28 | 31,549.18 | 30,132.63 | 29,192.52 |
| Total Revenue | 2,710.68 | 8,909.61 | 10,808.94 | 11,627.47 |
| Net Profits | 1,010.75 | 2,764.85 | 3,479.27 | 4,050.91 |
Decline in total revenue is majorly due to the cap put by SEBI on maximum expense ratio that can be charged by AMCs.
Valuation
| Valuation | FY 2020 |
| Price to Book Value (P/B) | 2.54 |
| Industry P/B (HDFC AMC) | 11.22 |
| Price to Earnings Value (P/E) (Trailing) | 25.73 |
| Industry P/E (HDFC AMC) | 35.17 |
Only two AMCs – Nippon India and HDFC are listed in India as of now and the valuation looks reasonably attractive in comparison to them.
Competitor’s Analysis
| AMC | In Rs. Billion(as on 30.06.2020) | |||
| MF QAAUM | PMS Closing AUM |
NPS Closing AUM |
Total AUM | |
| SBI | 3,644 | 7,250 | 1,786 | 12,680 |
| UTI | 1,336 | 7,014 | 1,356 | 9,706 |
| HDFC | 3,562 | 12 | 100 | 3,674 |
| ICICI | 3,263 | 27 | 51 | 3,341 |
| Nippon | 1,801 | 768 | 2,569 | |
| Aditya Birla Sun Life | 2,146 | 17 | 2 | 2,165 |
| Kotak | 1,673 | 18 | 11 | 1,702 |
| LIC | 150 | 36 | 1,341 | 1,527 |
| Axis | 1,343 | 11 | 1,354 | |
UTI stands in the 2nd position in total AUM but is on 8th position when we compare Mutual Funds only. UTI gets major business from government to manage its PMS and NPS.
Strength
- Strong brand recognition – oldest AMC with second largest total AUM.
- Wide reach in B30 cities (now, T30 & B30 are the two sets of cities made by SEBI. T30 cities are the top 30 cities where MF industry’s penetration is high and B30 cities are the next 30 cities where the penetration is low as of now.) Wide reach in B30 cities suggests that UTI has more advantage in an area relatively unexplored and untapped and thus, high growth expected from such areas.
- UTI has highest market share in B30 cities i.e. 24% AUM
- Industry average in B30 cities is 12.6% AUM
- These B30 cities are future growth centre.
- Diverse product offering – MF, PMS, NPS, etc.
- Strong distribution channel
- Strong position in retirement solutions
- Fund manager EPFO, CMPFO, ESCI, NSDF (in short – whole and sole fund manager of the government)
- PMS AUM grew at 143.9% since march 2018 (mainly government’s fund)
- Highest market share (44.7%) in PMS AUM and second highest (29.2%) in AUM of NPS funds
- Experienced management and investment teams supported by strong governance structures
Weaknesses
- Declining market share in MF AUM – among the top eight AMCs, it is one of the three AMCs which has seen a decline in AUM besides Nippon and Aditya Birla Front Line in last five years.
- Declining revenue and profit growth
Opportunities
- India is a large and growing MF market – MF AUM in growing at an approximate rate of 18% per year in India.
- Industry Revenue Growth Estimate (CRISIL) – 13% to 15% per annum
- Industry Net Profit Growth Estimate (CRISIL) – 15% to 16% per annum. This is due to shift towards equity schemes in future and expense ratio charged therein is relatively high.
- High potential in equity mutual funds – India has low equity MF penetration of 5%. Whereas in developed countries, US has 75%, Canada has 55% and UK has 40% of its entire MF AUM in equity
- Increasing digitalization in India – increasing apps and digital platforms is also increasing the penetration and ease of investing.
Threats
- SEBI fixed maximum total expense ratio that can charged
- Equity oriented schemes – 2.25%
- Other schemes – 2%
- COVID-19 – though this is a short-term concern but it has adversely affected disposable income which has resulted in lower equity investments.
- Business is dependent on market performance