CRISIL IPO grade 4/5 assigned to UTI AMC

MUMBAI: CRISIL has assigned IPO Grade "4/5" to the proposed issue of UTI Asset Management Company, which indicates that the fundamentals of the issue are above average relative to other listed equity securities in India. But the grade is not an opinion on whether the issue price is appropriate in relation to the issue fundamentals.

The grading reflects UTI AMC's position as one of the leading players in the mutual funds industry. The company has a higher proportion of retail and equity assets under management compared to other players by virtue of its strong retail distribution channel and brand recognition. The retail base helps UTI AMC to better manage the churn of assets, while the higher proportion of equity provides higher recurring management fees as compared to debt funds.

The grading reflects CRISIL's expectation that the management will be able to harness these strengths to mobilise mutual fund assets and register growth to substitute the expected decline in income from the Specified Undertaking of Unit Trust of India.

CRISIL also expects that in spite of being a specialised asset management company, UTI AMC will be able to effectively compete with universal service providers like the ICICI group, the HDFC group and the Reliance (ADAG) group.

UTI AMC aims to raise Rs 23-24 billion from the proposed offer for sale of 48,500,000 equity shares.

Source : The Economic Times