InvestorQ : Can you share with me the highlights of the UTI AMC Ipo and whether you think I should apply for the same?
Rashi Mehra made post

Can you share with me the highlights of the UTI AMC Ipo and whether you think I should apply for the same?

Answer
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Archita Jajjoo answered.
3 weeks ago


The all important IPO of UTI AMC opens this week. Here are the key highlights of the issue.

· The IPO of UTI AMC will open on September 29 and close on October 01. While it will be open for 3 days, investors must remember that 30 September is a bank non-transaction day at many centres due to half year closing.

· As part of the IPO, UTI AMC will offer a total of 3.8 crore shares in the price band of Rs.552-554. This is an offer for sale where the sale represent nearly 30.75% of the total stake of the promoters of UTI AMC.

· Among the major shareholders, LIC, SBI and Bank of Baroda will offload 8.25% stake each in the OFS. In addition, PNB and T Rowe Price will also offload 3% each taking the total divestment to 30.75%.

· The total issue size will be approximately Rs.2105 crore and that would give a valuation of close to Rs.6850 crore to UTI AMC. In terms of P/E this lower then HDFC AMC and Nippon AMC, but the ROE of UTI AMC is also much lower than the two.

· If one were to look at comparative valuations, HDFC AMC trades at 12.8% AUM while Nippon AMC trades at 9% of AUM. That makes UTI relatively cheaper and more attractive consider it is less than 6% of the AUM.

· For the retail investors infusing less than Rs.2 lakh in the IPO, the minimum bid size will be 27 shares and in multiples of 27 shares thereof. Post issue, the promoter stake will reduce from 100% to 69.25%.

· UTI ranks eighth all-India with an external AUM of Rs.1.35 trillion. But if you add the PMS monies that it manages for the government, EPFO etc, the total AUM stands at Rs.8,40,000 crore making it second in overall AUM only next to SBI MF.

My concluding remark would be to be a tad cautious. It may not give you great returns in the short run but could be a good way to buy into the AMC space. This is more so, considering that the valuations of UTI AMC are relatively lower than HDFC AMC or Nippon.