Date:08/11/2007 URL: http://www.thehindubusinessline.com/2007/11/08/stories/2007110852981600.htm

Back Banking stocks up on UTI IPO plans

Three banking stocks – State Bank of India, Punjab National Bank and Bank of Baroda – have been gaining on the bourses of late. BoB gained 15.24 per cent week-on-week and SBI jumped 9.64 per cent, while PNB improved about 4 per cent over a week period. During the period, the BSE Sensex declined by 2.76 per cent.

Merchant bankers

According to market participants, the IPO plans of UTI Asset Management company, which would appoint merchant bankers by this month end for valuing the firm, seemed to have lifted sentiment for these stocks.

UTI AMC, which manages UTI Mutual Fund, had planned the IPO to allow partial exit for the four sponsors. Apart from these three, LIC is the other sponsor. UTI AMC would be the country’s first fund house to tap the capital market. All the sponsors have an equal stake of 25 per cent in UTI AMC.

SEBI regulations

It may be recalled that at the time of restructuring exercise, the four sponsors paid a total of Rs 1,236.95 crore to the Government for the stake, making the UTI AMC at par with other private mutual funds complying with the SEBI regulations. Profits for the divesture should aid the valuation of these sponsors, say marketmen.

K.S. Badri Narayanan