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Wednesday, March 19, 2008

CRISIL IPO grade 4/5 assigned to the IPO of UTI Asset Management Company Ltd.

CRISIL has assigned a CRISIL IPO Grade "4/5" (pronounced "four on five") to the proposed initial public offer of UTI Asset Management Company Ltd. (UTI AMC). This grade indicates that the fundamentals of the issue are above average relative to other listed equity securities in India. However, this grade is not an opinion on whether the issue price is appropriate in relation to the issue fundamentals.

The offer price for the issue may be higher or lower than the level justified by its fundamentals. The grade is not a recommendation to buy / sell or hold the graded instrument, the graded instrument's future market price or its suitability for a particular investor.

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 (AUM) as 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 (SUUTI*). 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.


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