According to media reports, the finance ministry is pushing the candidature of Jitesh Khosla as head of UTI AMC. However, T Rowe Price, the single largest stakeholder in the AMC, does not seem to agree
UTI Asset Management Company (AMC), one of the largest AMCs in the country, is still awaiting the appointment of a new boss, after UK Sinha left to take charge of the Securities and Exchange Board of India (SEBI) in February.
According to media reports, the finance ministry, which indirectly controls a 74% stake in UTI AMC, is in favour of its own candidate for the top post, but T Rowe Price (TRP), the single largest stakeholder in the AMC, has threatened to exit from the venture if that happens.
The Human Resources (HR) panel set up by UTI is likely to shortlist probable names of candidates for the post of chairman and managing director by the end of this month, which will be sent to the board to take a view, and the shareholders will finally appoint the chairman, according to a report from the Press Trust of India.
The fund house has also hired executive search firm Egon Zehnder to recommend a suitable candidate to the HR Committee of the board.
Paranjoy Guha Thakurta, in an article published on Rediff.com, has said, "Political circles in New Delhi and the financial world in Mumbai are abuzz with speculation about the real reason why the powers-that-be are reportedly backing the candidature of Jitesh Khosla, a 1976 Assam cadre officer of the Indian Administrative Service, to take over the reins of UTI AMC."
"Khosla's nomination assumes significance since he is the brother of Omita Paul, adviser to Union Finance Minister Pranab Mukherjee. Paul, who used to belong to the Central Information Service (later Indian Information Service), has worked as Mukherjee's confidante and adviser for decades, including his recent stints at the helm of the ministries of defence and external affairs," the article says.
Earlier, in January 2010, T Rowe Price, the US-based foreign institutional investor, completed its acquisition of a 26% stake in UTI AMC through its wholly-owned subsidiary T Rowe Price Global Investment Services for Rs650 crore and thus gained representation on the board of UTI AMC. The foreign fund acquired a 6.5% stake from each of the four original stakeholders-State Bank of India, Punjab National Bank, Bank of Baroda and LIC-amounting to 26%, in UTI Asset Management Company and UTI Trustee Company. The four original stakeholders, three nationalised banks and the insurance behemoth still hold 18.5% each, or 74% together, in UTI AMC. This gives the government an indirect control of the AMC.
"While speculation is rife as to whether the ministry wants to control UTI AMC by proxy, there is also a view that by appointing Khosla the finance ministry would be accused of nepotism. While it is not clear how strongly T Rowe Price would register its protest against attempts to appoint Khosla as the executive head of UTI AMC, the beleaguered Manmohan Singh government can ill-afford another scandal," Mr Guha Thakurta, who is also a member of the Press Council of India, wrote.
Mr Khosla is currently officer on special duty at the Indian Institute of Corporate Affairs. As joint secretary in the Union ministry of corporate affairs he had overseen the government's intervention in the Satyam scandal.
UTI Mutual Fund had assets under management (average) amounting to Rs65,387.25 crore and investor accounts of around one crore in 81 domestic schemes at the end of December 2010.
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