Crisil has come out with report on UTI Asset Management Company IPO. It has assigned Grade 4/5 to its IPO. UTI AMC is planning to raise Rs 23-24 billion by this proposed offer for sale of 48,500,000 equity shares.
Crisil report on UTI Asset Management Company IPO
Crisil has assigned a CRISIL IPO Grade "4/5" to the proposed initial public offer of UTI Asset Management Company (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.
The grading has factored in the undifferentiated nature of products offered by the mutual funds industry in India. This and customers' lack of knowledge about the product, leads to high bargaining power of distributors' vis-à-vis AMCs in the MF Industry. Consequently, distributors command a majority of the surplus made in the AMC business. Further, increasing competition and proactive policy changes by the regulator may put pressure on management fees in the AMC business in future. CRISIL believes that more pro-activeness on part of the management will be critical to capture emerging opportunities in the fast changing asset management businesses like domestic portfolio management services and private equity.
The choice of the pre-IPO strategic investors, their role in UTI AMC's management and the utilisation of proceeds garnered through private placement can have a material impact on the company's business profile.
About the company and the issue
UTI Asset Management Company was formed as a result of the bifurcation of the erstwhile Unit Trust of India into two entities in October 2002. UTI AMC, in its new form, commenced operations with effect from February 1, 2003. Four government-owned sponsors - State Bank of India, LIC, Punjab National Bank, and Bank of Baroda - took equal stakes in the UTI AMC. Subsequent to the IPO the sponsors would still hold majority stake of about 54 per cent.
UTI AMC is one of the largest players in Indian mutual fund industry, with a market share of around 10.3 per cent as of December 2007. UTI AMC has 8.1 million retail investors spread across 455 cities accounting for 51.2 percent of the total domestic AUM.
The company also offers PMS to its clients. As of September 2007, UTI AMC's PMS business had around 320 clients and assets under management (AUM) amounting to Rs 21,609 million.
In addition, UTI AMC has three wholly-owned subsidiaries:
* UTI Venture Funds Management Company Pvt. Ltd (UTIVF), which has till date launched 2 funds with total committed corpus of about Rs 8,535 million
* UTI International Limited (UTIIL), which markets UTI AMC's domestic funds overseas and manages the assets and services investors of its offshore funds. As of September 2007, the total AUM of overseas funds was Rs 17,840 million
* UTI Retirement Solutions Ltd. that has been floated to manage the assets of Pension Fund Regulatory Development Authority
In 2006-07, UTI AMC reported a net profit of Rs 1,529 million on a turnover of Rs 4,096 million. This is as against net profit and revenues of Rs 1,747 million and Rs 3,921 million respectively in 2005-06.
UTI AMC aims to raise Rs 23 billion to Rs 24 billion by this proposed offer for sale of 48,500,000 equity shares.
* SUUTI was formed subsequent to the bifurcation of the erstwhile UTI into two separate entities. It is vested with the assets of UTI's US-64 and assured return funds, while UTI AMC manages all SEBI-compliant schemes. UTI AMC
provides support services such as fund administration, accounting, and investor services to SUUTI.
Source: Moneycontrol.com
Showing posts with label CRISIL IPO Grade. Show all posts
Showing posts with label CRISIL IPO Grade. Show all posts
Wednesday, March 19, 2008
Monday, December 31, 2007
CRISIL assigns grade 4/5 to Reliance Power IPO
CRISIL has come out with research report on Reliance Power IPO. The firm has assigned a CRISIL IPO Grade '4/5' to the proposed initial public offer of Reliance Power (RPower), in a report dated December 31, 2007.
The company proposed public issue of 260 million equity shares of face value Rs 10 targeted at an issue size in the range of INR 105 to 115 billion.
CRISIL research report on Reliance Power IPO
CRISIL has assigned a CRISIL IPO Grade '4/5' to the proposed initial public offer of Reliance Power (RPower). This grade indicates that the fundamentals of the issue are above average, in relation to other listed equity securities in India.
The grading assigned reflects CRISIL's view that strong demand for power in India will catalyse regulatory facilitation for private participation in the power sector over the medium to long term. In this scenario, early movers like RPower will benefit from attractive business opportunities that are likely to come about as a result, especially if they achieve high levels of financial capability, as is likely for RPower after its proposed IPO.
The grading also reflects the Reliance Anil Dhirubhai Ambani Group's commitment that RPower will be the sole repository of the Group's economic interest in the power generation segment. The grading is tempered by the fact that RPower is planning to put up capacity, on a scale and within a time frame, never achieved in India before and therefore it is likely to face significant implementation challenges.
The grading also reflects the fact that power generators in India will have to depend on SEBs for off take over the short-to-medium term and that their return will be subject to the regulatory oversight in case of Two-part tariff based Projects such as Rosa I (600 MW) and Rosa II (300 MW). Also, returns on the projects won through the competitive bidding route may not be substantially higher due to competition.
About the company
Reliance Power is a part of the Reliance ADA Group and has been established with the objective to develop, construct and operate power projects both domestically and internationally.
RPower does not have any power plant in operation as of now. The company proposes to install 28,200 Mega watt (MW) generation capacity over the next 8 years. Of the total proposed capacity, six projects totalling 7060-MW (Butibori, Shahapur coal, Sasan, Rosa-I &II and Urthing Sobla) are in various stages of implementation. Commercial operations of the first unit of proposed project, Rosa-I (2*300 MW), is expected by December 2009. All the six identified projects would be executed through wholly-owned subsidiaries of RPower, except Urthing Sobla and Butibori, where RPower would hold 80 percent stake and 74 percent stake, respectively.
Besides, the aforementioned identified projects which are in advanced stages of implementation, RPower also proposes to set up seven more generation projects, which are in developmental stage. These include the gas-fired Dadri (7,480 MW) and Shahapur gas project (2,800 MW); the coal-fired MP Power project (3,960 MW) and Krishnapatnam (4,000 MW); three run-of-the-river hydroelectric projects, Siyom (1,000 MW), Tato II (700 MW) and Kalai II (1,200 MW).
Source: Moneycontrol.com
The company proposed public issue of 260 million equity shares of face value Rs 10 targeted at an issue size in the range of INR 105 to 115 billion.
CRISIL research report on Reliance Power IPO
CRISIL has assigned a CRISIL IPO Grade '4/5' to the proposed initial public offer of Reliance Power (RPower). This grade indicates that the fundamentals of the issue are above average, in relation to other listed equity securities in India.
The grading assigned reflects CRISIL's view that strong demand for power in India will catalyse regulatory facilitation for private participation in the power sector over the medium to long term. In this scenario, early movers like RPower will benefit from attractive business opportunities that are likely to come about as a result, especially if they achieve high levels of financial capability, as is likely for RPower after its proposed IPO.
The grading also reflects the Reliance Anil Dhirubhai Ambani Group's commitment that RPower will be the sole repository of the Group's economic interest in the power generation segment. The grading is tempered by the fact that RPower is planning to put up capacity, on a scale and within a time frame, never achieved in India before and therefore it is likely to face significant implementation challenges.
The grading also reflects the fact that power generators in India will have to depend on SEBs for off take over the short-to-medium term and that their return will be subject to the regulatory oversight in case of Two-part tariff based Projects such as Rosa I (600 MW) and Rosa II (300 MW). Also, returns on the projects won through the competitive bidding route may not be substantially higher due to competition.
About the company
Reliance Power is a part of the Reliance ADA Group and has been established with the objective to develop, construct and operate power projects both domestically and internationally.
RPower does not have any power plant in operation as of now. The company proposes to install 28,200 Mega watt (MW) generation capacity over the next 8 years. Of the total proposed capacity, six projects totalling 7060-MW (Butibori, Shahapur coal, Sasan, Rosa-I &II and Urthing Sobla) are in various stages of implementation. Commercial operations of the first unit of proposed project, Rosa-I (2*300 MW), is expected by December 2009. All the six identified projects would be executed through wholly-owned subsidiaries of RPower, except Urthing Sobla and Butibori, where RPower would hold 80 percent stake and 74 percent stake, respectively.
Besides, the aforementioned identified projects which are in advanced stages of implementation, RPower also proposes to set up seven more generation projects, which are in developmental stage. These include the gas-fired Dadri (7,480 MW) and Shahapur gas project (2,800 MW); the coal-fired MP Power project (3,960 MW) and Krishnapatnam (4,000 MW); three run-of-the-river hydroelectric projects, Siyom (1,000 MW), Tato II (700 MW) and Kalai II (1,200 MW).
Source: Moneycontrol.com
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