UTI Asset Management Co., India's oldest money manager, canceled plans to sell shares after the nation's benchmark index posted its worst first half on record, four people familiar with the matter said.
UTI, based in Mumbai, had proposed to sell 48.5 million shares, according to an offer document filed with the Securities & Exchange Board of India on Jan. 9. The money manager is required to complete the IPO by July 21 or restart the process, under Indian rules. Khurshid Mistry, a spokeswoman for UTI Asset, declined to comment today.
The money manager becomes the fifth Indian company to pull a share sale this year, and joins more than 160 companies, including developer Emaar MGF Land Ltd., to have delayed or canceled IPOs globally in 2008 as faltering economic growth led investors to abandon equities. The withdrawal is a blow to UTI's owners, who can't raise funds from selling stakes bought in 2005.
``It is bad news for State Bank of India and Life Insurance Corp.,'' two of the four shareholders, said Dhirendra Kumar, managing director of Value Research Ltd., a firm that tracks Indian mutual funds. Still, ``I don't think it is a permanent shelving, it may be just a temporary postponement.''
State Bank of India, Life Insurance, Punjab National Bank Ltd. and Bank of Baroda, the four government-controlled entities that each hold 25 percent of the UTI Asset, were planning to sell 12.1 million shares, or 38.8 percent of their combined holding, said the offer document.
Benchmark Index Drops
The Unit Trust of India was formed in 1963. In 2003, the ailing fund management business was split into two, and stakes in UTI Asset was sold to the four state-run companies in 2005.
The IPO may be revived later, said the people, who asked not to be named before an official announcement.
UTI Asset planned the share sale after the Bombay Stock Exchange's Sensitive Index climbed 47 percent last year, making it Asia's best performer after China and Bangladesh. The index is down 32 percent this year as interest rates climbed to a six-and- a-half year high after surging fuel and foods costs drove inflation to a 13-year high.
JM Financial Consultants Pvt., Citigroup Inc. and Enam Securities Pvt. were hired to arrange the IPO. Goldman Sachs Group Inc., UBS AG, ICICI Securities Ltd., SBI Capital Markets Ltd. and CLSA Ltd. also won mandates to manage the sale.
UTI Asset Management also canceled plans to sell 16 million shares to select investors before the IPO, the people said.
UTI, based in Mumbai, had proposed to sell 48.5 million shares, according to an offer document filed with the Securities & Exchange Board of India on Jan. 9. The money manager is required to complete the IPO by July 21 or restart the process, under Indian rules. Khurshid Mistry, a spokeswoman for UTI Asset, declined to comment today.
The money manager becomes the fifth Indian company to pull a share sale this year, and joins more than 160 companies, including developer Emaar MGF Land Ltd., to have delayed or canceled IPOs globally in 2008 as faltering economic growth led investors to abandon equities. The withdrawal is a blow to UTI's owners, who can't raise funds from selling stakes bought in 2005.
``It is bad news for State Bank of India and Life Insurance Corp.,'' two of the four shareholders, said Dhirendra Kumar, managing director of Value Research Ltd., a firm that tracks Indian mutual funds. Still, ``I don't think it is a permanent shelving, it may be just a temporary postponement.''
State Bank of India, Life Insurance, Punjab National Bank Ltd. and Bank of Baroda, the four government-controlled entities that each hold 25 percent of the UTI Asset, were planning to sell 12.1 million shares, or 38.8 percent of their combined holding, said the offer document.
Benchmark Index Drops
The Unit Trust of India was formed in 1963. In 2003, the ailing fund management business was split into two, and stakes in UTI Asset was sold to the four state-run companies in 2005.
The IPO may be revived later, said the people, who asked not to be named before an official announcement.
UTI Asset planned the share sale after the Bombay Stock Exchange's Sensitive Index climbed 47 percent last year, making it Asia's best performer after China and Bangladesh. The index is down 32 percent this year as interest rates climbed to a six-and- a-half year high after surging fuel and foods costs drove inflation to a 13-year high.
JM Financial Consultants Pvt., Citigroup Inc. and Enam Securities Pvt. were hired to arrange the IPO. Goldman Sachs Group Inc., UBS AG, ICICI Securities Ltd., SBI Capital Markets Ltd. and CLSA Ltd. also won mandates to manage the sale.
UTI Asset Management also canceled plans to sell 16 million shares to select investors before the IPO, the people said.
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