UTI AMC IPO: Good or Bad

About the Company

UTI AMC is the second largest asset management company in terms of total AUM (Assets Under Management). Incorporated in 2002 it is in the business of managing the domestic mutual funds of UTI Mutual Fund, provides portfolio management services to institutional clients and high net worth individuals, manages retirement funds and alternative investment funds. UTI AMC has four sponsors SBI, LIC, BoB and PNB each of which has Government of India as a majority shareholder, it also a global asset management company T. Rowe Price International Ltd as one of its major stake holders with 26% stake in the company.

About the IPO

The IPO of UTI AMC aims to raise INR 2,160 crores of capital through issuance of 38,987,081 equity shares at face value of INR 10. The IPO will open for subscription on 29th September (Tuesday) and close on 1st October (Thursday). The price band of UTI AMC has been fixed at ₹552 to ₹554 with the minimum lot size to be of 27 shares (And multiples thereon). This means that one has to shell out at least INR 14,958 to bid for the issue. SBI, LIC and BoB are offering to sell 1,04,59,949 shares each while PNB and T. Rowe Price International are going to offload 38,03,617 shares each. The company has also reserved 2 lakh equity shares for its eligible employees.

The book running lead managers appointed for the issue are Kotak Mahindra Capital Company, Citigroup Global Markets India, ICICI Securities, SBI Capital Markets, JM Financial, Axis Capital and DSP Merrill Lynch.

UTI AMC IPO Details

IPO Date	29th Sep, 2020 to 1st Oct, 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

UTI AMC IPO Tentative Timetable

Bid/Offer Opens On	29th Sep, 2020
Bid/Offer Closes On	1st Oct, 2020
Finalisation of Basis of Allotment	7th Oct, 2020
Initiation of Refunds	8th Oct, 2020
Credit of Shares to Demat Acct	9th Oct, 2020
IPO Shares Listing Date	12th Oct, 2020

Lot Size And Price

Application	Lots	Shares	Amount
Minimum	1	27	₹14,958
Maximum	13	351	₹1,94,454

Promoter Holding

Pre Issue Share Holding	100%
Post Issue Share Holding	69.2%

Objective of the issue:

The objects of the IPO are to achieve the benefits of listing the equity shares on the stock exchanges and to carry out the sale of equity shares offered for sale by the promoters. In addition, the listing of the company's equity shares will enhance visibility and brand name among existing and potential customers.

Financials:

Summary Of Financial Information

Particulars	For the year (₹ in million)
	31-Mar-20	31-Mar-19	31-Mar-18
Total Assets	31,549.18	30,132.63	29,192.52
Total Revenue	8,909.61	10,808.94	11,627.47
Profit After Tax	2,764.85	3,479.27	4,050.91

Comparison With Peers:

Company	FV	Share Price	MCap (in million)	AUM (in miilion)	MCap/AUM
Nippon India	10	₹ 282	₹ 1,73,140	₹ 20,08,670	8.60%
HDFC AMC	05	₹ 2143	₹ 4,56,210	₹ 38,03,720	12.10%
UTI AMC	10	₹ 554	₹ 65,170	₹ 15,56,470	4.18%

Risk Factors:

• A substantial portion of UTI's domestic fund QAAUM (Quarterly Assets Under Management) is concentrated in a few schemes.
• UTI AMC's market share has declined consistently over the past years and may continue to do so, which could have an adverse impact on the business, financial condition and results of operation.
• Credit risk related to the debt portfolio of funds to significant losses, which may have a material adverse effect on the business, financial condition and results of operations.

Our Outlook:

The valuation at which shares are offered is very attractive as compared to peers like HDFC AMC and Nippon India. One can bid in this IPO for listing gains.