Mumbai: American asset manager T. Rowe Price has withdrawn its case against the finance ministry, Securities and Exchange Board of India (Sebi) and four public sector shareholders of UTI Asset Management Co. T. Rowe Price, the single-largest shareholder of UTI Mutual Fund, had approached the Bombay high court against the four state-run financial institutions-State Bank of India (SBI), Life Insurance Corp. (LIC) of India, Punjab National Bank (PNB) and Bank of Baroda, to bring down their individual stakes from 18.25% to 10% to comply with the mutual fund shareholding norms as laid down by Sebi.
On Tuesday, Fredun De Vitre, senior counsel who was appearing for T. Rowe Price, informed the court that the fund house sought to withdraw its petition since issues raised by the firm was addressed and an assurance has been given by the Indian government. “T. Rowe Price is still in talks with the government and we are seeking to withdraw the petition with the liberty to file it again if it was required," said De Vitre.
The division bench of the court comprising Justices B.R. Gavai and M.S. Karnik subsequently allowed the asset management company to withdraw the petition and disposed of the case.
When UTI Mutual Fund was established, the four stakeholders were brought on board as temporary custodians. It was agreed that over time, the shareholders will exit the company through an IPO. Between 2003 and 2005, the Indian shareholder had infused ₹ 312 crore to pick up 25%, each, in UTI. Subsequently in 2009, T. Rowe Price had picked up a 26% stake in the AMC for ₹ 162 crore.
On 13 August, the US-based shareholder of UTI Mutual Fund had sought more time saying that it was in talks with the government for an out-of-court settlement.
A Sebi order in March 2018, intended to avoid potential conflict of interest and strengthen the governance structure of mutual funds, had said that no shareholder of an AMC can own more than a 10% stake in another AMC, and those who own such stakes need to bring them down by March 2019. Such shareholders will also not be allowed to be on the board of both AMCs.
T. Rowe had also sought an extension for Leo Puri so that he could continue as managing director and CEO of UTI Mutual Fund to ensure that the proposed initial public offering goes through without hindrance. Appointed in 2013, Puri’s term had ended on 13 August, and he decided to quit.
“The issue of Puri’s extension doesn’t arise any more and there is enough time till March 2019 to comply with the Sebi guidelines," said a person close to the development. “The government and T. Rowe are discussing to iron out other issues as well, and talks are in an advanced stage."
When contacted, Mona Bhide, managing partner of Dave Girish and Co, the adviser to UTI AMC, ABH Law founding partner Munaf Virjee, who is representing T. Rowe, and Mihir Mody, partner of law firm K Ashar and Co, who is advising Sebi, refused to comment.
When contacted, T. Rowe Price said: “We did not plan to pursue this petition if appropriate action were taken by the government, the regulator, and the four PSU shareholders. We now have increasing confidence that they are taking steps to comply with Indian law and regulations regarding divestment of the PSU shareholders’ stakes in UTI Mutual Fund and toward an eventual IPO of the firm."