UTI Asset Management Company, which runs one of the leading fund houses UTI Mutual Fund, may have to start afresh its search process to find a full-time chief – a position lying vacant for about 19 months now.
Two of the short-listed candidates for the position of Chairman and Managing Director (CMD) of UTI Asset Management Company (AMC) have failed to muster the required support of either the board members or the shareholders in quick succession, sources close to the development said.
The board of UTI AMC is currently reviewing all options, including the legal aspects involved with rejection of some candidates, to take forward the process, sources added.
The shareholders are also expected to discuss among themselves the possible options, including suggesting some names to the board, they said, while adding that attempts could be made to convince the shareholders about one of the previously short-listed names.
UTI AMC, which used to run the country’s largest fund house at one point of time, has been continuously losing ground to its competitors, for which one of the often-cited reasons has been absence of a full-time chief to head the company.
The fund house became headless in February 2011, when its then chief U.K Sinha left to become the Chairman of capital market regulator SEBI (Securities and Exchange Board of India).
In January this year, the board of UTI AMC appointed its Chief Finance Officer Imtaiyazur Rahman as an acting CEO, till the appointment of a new full-time Chairman and Managing Director.
Since then, Imtaiyazur Rahman has been looking after the day to day operations of the company in consultation with the senior leadership team.
The fund house has been trying to appoint a full-time chief ever since the position fell vacant in February last year, but it has not been able to do so for one or the other reasons.
In the latest attempt, the board recently proposed the name of Sunil Mehta, global insurance giant AIG’s India country head, as the new chief of UTI AMC, but his nomination was shot down by some of the shareholders, a senior executive said.
Prior to this, another short-listed name, consultancy major McKinsey’s senior adviser in India, is said to have been red-flagged after complaints that he did not meet the educational qualification criteria mentioned in the advertisement inviting applications for the position of CMD at UTI AMC.
UTI AMC’s shareholders, include four public sector financial institutions – LIC, State Bank of India, Punjab National Bank and Bank of Baroda with 18.5 per cent stake each, while the remaining 26 per cent holding is with US-based fund house T Rowe Price.
Prior to the stake purchase by T Rowe Price in 2009, each of the four Indian shareholders held 25 per cent stake in the fund house.
Once the country’s biggest fund house, UTI MF has now fallen to fifth place after HDFC, Reliance, ICICI Pru and Birla Sun Life MFs.
It had an average AUM (Asset Under Management) of over Rs 60,000 crore in the last quarter ended June 30, 2012.