After dilly-dallying for almost two years, the board of UTI, the country’s oldest and fifth-largest mutual fund, recently approved the appointment of Leo Puri as its managing director. Puri was tipped to be appointed last year but he faced roadblocks from certain quarters, including shareholders.
The delayed appointment reflects the bureaucratic overhang government entities are known for. The move is seen as the first step towards turning the fund house into a privately managed entity.
The US-based investment manager T Rowe Price, which owns 26 per cent in UTI AMC, has been trying hard to bring in a professional as the fund’s head. The other investors include State Bank of India, Punjab National Bank, Bank of Baroda and Life Insurance Corporation which hold 18.5 per cent each.
“UTI is moving in the right direction. Eventually, the domestic stakeholders can sell their stake to T Rowe Price which would make UTI a success along the lines of Franklin Templeton and DSP BlackRock,” said a fund manager on the condition of anonymity.
Insiders and fund managers see the appointment as a reflection of large shareholders’ ability to bring change in a company. Despite opposition from other public sector investors, Puri managed to get the board’s approval with the support of T Rowe Price.
“Eventually, who would want a government-owned fund manager? With the appointment of a professional as the fund’s head, T Rowe Price’s job is half done,” said a fund manager, who played a key role in transitioning a captive unit in to a full-grown asset management firm, on the condition of anonymity.
The top post of UTI AMC has been vacant since early 2011 when its previous head UK Sinha moved on to become the chief of securities market regulator SEBI. Since the departure of Sinha from UTI, there have been many attempts to bring Puri as the head of UTI.
“Puri is not new to the industry. The first good news was when T Rowe Price bought stake in the company, which set the stage for its privatisation eventually. The appointment (of Puri) is aimed at bringing UTI under a private management,” said another fund manager, who did not wish to disclose his name.
Fund managers see the appointment as a saving grace for the company and indicate that the government’s intervention has been very minimal during the appointment, considering the larger scheme of things.
Puri brings three decades of experience in the financial services industry. He is the former head of McKinsey in India and joined as managing director at Warburg Pincus India Pvt Ltd in March 2007. After a four-year stint, he quit the PE firm a couple of months after UTI lost its chief. During his presence at the PE firm, Warburg Pincus invested in close to a dozen firms, including Punj Lloyd, Amtek Auto, Havells India, Laqshya Media, Unique Affordable Homes, Metropolis Healthcare and Continental Warehousing. He currently serves as a senior advisor at McKinsey & Co, Inc., where he joined in December 2011. He is also an additional director of Infosys.
Last month, the shareholders agreed to separately appoint a managing director and a chairman who is expected to play a non-executive role.
In the past, a search panel interviewed the fund house's acting CEO Imtaiyazur Rahman in addition to Puri. The interviews followed a fresh search process initiated by the board of UTI AMC in October last year. Later, the board proposed the name of Sunil Mehta, global insurance giant AIG India's country head, as the chief of UTI AMC, but his nomination was shot down. In 2011, senior bureaucrat Jitesh Khosla was also said to be considered as CMD but T Rowe Price opposed the proposal as it wanted a professional to head the fund.
(Edited by Joby Puthuparampil Johnson)