UTI Asset Management Company Ltd, the country’s fourth-largest fund house has announced that 26 per cent stake in the company has been acquired by the T Rowe Price Global Investment Services Ltd, a wholly owned subsidiary of T Rowe Price Group Inc.

The deal was concluded in October 2009 and been cleared by the government and Sebi.

The public sector banks State Bank of India, Punjab National Bank, Bank of Baroda along with Life Insurance Corporation of India are promoters of the company. The four state-owned firms had contributed 25% each to the capital of UTI AMC when the government restructured the mutual fund in 2002-03.

All four have now agreed to a partial sale of their stakes in the company to T. Rowe Price.

The sale would boost their earnings in the December quarter. Analysts say that the stake sale would offset sluggish credit demand and a fall in treasury incomes.

The three banks and LIC will receive Rs 163 crore each for divesting 6.5% of their stake in the company. After the deal the existing sponsors will hold a stake of 18.5 per cent each in the company.

All four firms have their own asset management companies, LIC Mutual Fund, SBI Mutual Fund, BOB-Pioneer AMC and Principal PNB Mutual Fund who compete with UTI in the market.

UTI is bigger in size than all four. UTI mutual fund is valued at around Rs 2,500 crore with assets under management aggregating Rs 78,203 crore as on December 2009.

The Chairman and Managing Director of the company outlined that the UTI’s knowledge in the Indian market will complement global best practices, systems and processes of T. Rowe Price.

He said that “this is a major milestone for UTI AMC and will help accelerate our growth. We look forward to a long and fruitful association with T. Rowe Price.”

Some analysts believe that the acquisition has set a lower value for UTI at only around 3.5% of its average assets under management.