After unsuccessfully petitioning the finance ministry and the Securities and Exchange Board of India (Sebi), US investor T Rowe Price (TRP) on Wednesday filed a case in the Bombay High Court against the Indian government asking it to prevent PSU financial investors — State Bank of India, Life Insurance Corporation (LIC), Punjab National Bank (PNB) and Bank of Baroda — from scuttling Unit Trust of India’s (UTI) attempts at an initial public offering (IPO) and trying to take over the country’s fourth largest mutual fund through the back door.
TRP owns 26 per cent of UTI and was sold these shares in 2009-10 by the government as part of a process to make UTI a board-managed professional company.
With TRP accusing the four PSUs of trying to stall UTI’s IPO “for reasons best known to them” and to ensure it becomes headless soon — current MD Leo Puri’s term ends soon — at stake are the interests of 11 million shareholders, lakhs of pensioners, Rs 3.6 lakh crore of UTI’s corpus and India’s reputation as a safe place for global investors.
Others named in the petition are Sebi and the four PSU financial institutions — Sebi’s job is to ensure the mutual fund guidelines were adhered to, so the suit asks the court to ensure Sebi does this.
The battle between TRP and the government and the PSUs controlled by it began in April 2011 when TRP managed to fob off an attempt by the finance ministry to ensure its nominee was appointed the fund’s CMD. While a truce of sorts was reached when Puri was appointed managing director after an independent search, uneasy relations prevailed since.
The petition asks for implementation of Sebi’s rules that the four PSUs lower their individual stakes in UTI to 10 per cent each from 18.25 per cent right now and to grant Puri a 12-month extension to see the IPO through. —FE