Unravelling ownership in AMCs of the largest MFs
Dec 07 2012 , FC Research Bureau
Top 5 mutual funds own half the industry’s assets and their AMCs have interesting stakeholders
But does it reveal the complete and accurate picture? Generally, an equal partnership between two shakeholders will result in both their names appearing in the name of the mutual fund, otherwise only with the largest shareholder in the AMC will be reflected in the name. But there is no comprehensive or adequate disclosure of AMCs’ shareholders names and shareholders holding on most fundhouses’ websites.
As per the Securities and Exchange Board of India (Sebi)-dicated listing rules of stock exchanges, the disclosure of shareholding pattern of listed companies includes providing names and shareholding details of all the promoters and any public shareholder holding more than 1 per cent stake. While there is no separate Sebi requirement for unlisted AMCs, a greater than 1 per cent stake is a good benchmark number to assign significance to a shareholder’s holding in an AMC.
Financial Chronicle Research Bureau analysed the ownership status of the AMCs behind the five largest mutual funds by virtue of the size of their Association of Mutual Funds of India (Amfi)-disclosed average assets under management (AUM) in the July-September quarter (see charts). HDFC Mutual Fund had the largest average AUM of Rs 97,774 crore, followed by Reliance MF’s Rs 86,327 crore, ICICI Prudential MF’s Rs 76,387 crore, Birla Sun Life MF’s Rs 72,905 crore and UTI MF’s Rs 70,783 crore.
HDFC AMC, the investment manager for HDFC MF’s schemes, had an equity capital of Rs 25.17 crore at face value as of April 25 and clocked a profit after tax of about Rs 270 crore in FY12. It is owned by Housing Development Finance Corporation (HDFC) and Scotland-registered Standard Life Investments with respective stakes of 59.98 per cent and 39.99 per cent.
A bunch of 17 other shareholders held 0.04 per cent in HDFC AMC, and about half this minority stake was held by an individual named Sateesh Sunke, a resident of Thane near Mumbai. The AMC did not see any change in the shareholding pattern in the past two years except for a fresh issue of a miniscule number of equity shares amounting to 0.03 per cent of the total paid-up capital to some individuals.
But Reliance Capital Asset Management (RCAM), the AMC behind the second-largest mutual fund, saw interesting stake changes and that too in the past one year. In May 2011, it had an equity capital of face value Rs 10.76 crore, of which, Reliance Capital held 92.93 per cent, EP Global Markets (Cayman) held 4.74 per cent and Reliance ADA Group Trustees (RAGT) held 2.32 per cent.
In May this year, a 1:1 bonus issue was made only to the two minority shareholders as a result of which the total paid-up capital went up to Rs 11.52 crore with EPGM (Cayman) holding 8.85 per cent, RAGT holding 4.34 per cent and Reliance Capital’s stake reduced to 86.80 per cent. On August 17, Reliance Capital announced it had completed sale of 26 per cent stake in RCAM to Japan-based Nippon Life Insurance for a sum of Rs 1,450 crore at a price of Rs 4,841 per share of face value Rs 10 each.
This should have bought down Reliance Cap’s stake to 60.80 per cent. But its statutory filing with registrar of companies just a few days later on August 22 revealed its stake to be higher at 65.23 per cent. This coincided with EPGM (Cayman)’s stake coming down to 4.43 per cent from 8.85 per cent.
It is not yet clear whether Reliance Capital bought this stake from EPGM (Cayman) for the same price as it sold to Nippon, but if it did, it would have paid about Rs 247 crore towards it. Queries sent by Financial Chronicle to Reliance Capital went unanswered. RCAM also has a paid up preference shares capital of face value Rs 0.20 crore.
ICICI Prudential AMC’s case is a fairly simple one, of almost a 50:50 ownership between ICICI Bank and UK-based Prudential Corporation Holdings (see chart) and no changes taking place in the past two years. Same was the case with Birla Sun Life AMC where Aditya Birla Financial Services (ABFS) and Canada-based Sun Life (India) AMC Investments have an almost 50:50 ownership. The last stake change took place in March 2010 when Aditya Birla Novo transferred its 50 per cent stake to ABFS.
Among the largest five fund houses, UTI AMC had the most diversified shareholdings and it also had the largest paid-up equity capital of Rs 125 crore at face value. As on July 18, US-based T. Rowe Price Global Investment Services held 26 per cent stake in it followed by Punjab National Bank (PNB), Life Insurance Corporation of India (LIC), State Bank of India (SBI) and Bank of Baroda, with each of them holding around 18.5 per cent each. The last stake change in UTI AMC occurred in January 2010 when PNB, LIC, SBI and BoB each sold 6.5 per cent stake to T. Rowe Price.
The analysed five AMCs were managing for their mutual funds a total average AUM of Rs 4,04,175 crore in the July-September quarter. This was 54 per cent of industry-wide average AUM across a total of 44 mutual funds. Mutual fund experts suggest investors should carefully scrutinise the stakeholding pattern in the remaining 39 mutual funds.