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July 4, 2001
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Money > Business Headlines > Report July 4, 2001 |
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UTI plans block sale of corporate investmentsRakesh P Sharma Unit Trust of India is planning block sales of its strategic investments in corporates to prop up the net asset value of flagship scheme US-64. "We are in the process of putting a right strategy in place. US-64 will start block sale of strategic holdings soon. Fund managers of other UTI schemes will also be consulted. There are cases where US-64 as well as other UTI schemes are collectively holding chunks of shares in various corporates. We may sell them together," said UTI executive director Brij Gopal Daga. The mutual fund behemoth has also constituted a panel along with LIC and GIC to oversee the secondary market operations. The three institutions together could enter into block deals. "This, we feel, will help us realise better value for the stocks," Daga told Business Standard. According to him, there could also be off-market negotiated deals. "There are many ways of doing it. There could be off market deals. We may also call for bids," he pointed out. Daga stoutly defended the UTI decision to suspend sale and repurchase of US-64 for six months. "This is in conformity with the UTI Act. We have done nothing illegal," he said. According to him, there were three options before UTI. One was to continue with the present system of administered price, where there would be no linkage between the underline asset price and administered price. If UTI had continued with this, it would have benefited only the large investors who enter the scheme before the announcement of sale or repurchase price and then exit. The second option UTI had was to make US-64 NAV-linked with immediate effect. This would have created panic in the market, he said. "The best option for UTI was to suspend sale/repurchase of the scheme for a temporary period. Suspension of a scheme for a temporary period is nothing new in the international market. You will see other mutual funds following this practice," Daga said. He pointed out that the move would not impact long-term retail investors, who have being holding US-64 as part of a regular source of income. Currently, retail investors account for more than 25 per cent in the US-64 scheme. Powered by YOU MAY ALSO WANT TO READ:
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