Now that Pranab Mukherjee has retired to Rashtrapati Bhavan, UTI Asset Management Company’s 18-month-long wait for a chief has finally ended .
Senior McKinsey advisor Leo Puri has pipped AIG’s Sunil Mehta and Punit Sinha, ex-MD of Blackstone India, in bagging the top job. UTI has been topless ever since the previous incumbent, UK Sinha, quit to become the head of Sebi in February 2011, The Economic Times reported today.
The recruitment of a chief has been hanging fire for a while as Pranab Mukherjee’s powerful advisor, Omita Paul, had reportedly favoured the candidature of her brother, Jitesh Khosla, as the Chairman and Managing Director of UTI Mutual Fund.
The idea, however, did not find favour with either the fund’s strategic investor, T Rowe Price (26 percent stake), which argued that the head of a mutual fund cannot be another bureaucrat. Even the public sector shareholders (LIC, GIC, SBI and Bank of Baroda) said it would end up raising governance issues at the fund, a Firstpost story had said earlier.
But why did the finance ministry risk a prolonged leadership vacuum to push its favoured nominee?
The matter came to a head when Sebi stopped UTI from announcing new scheme in the absence of a CEO and the fund’s assets under management soon started falling.
As Firstpost noted earlier, Sebi rules do not allow a headless mutual fund to launch fixed income plans – which were the flavour of the season, with equity having gone out of fashion for a while .
In January, to end the Sebi blockade on new schemes, the UTI board appointed an interim CEO, Imtaiyazur Rahman, who was earlier part of the four-member ad hoc committee set up to run the fund.
With the decision to pick Leo Puri, UTI Mutual Fund’s has finally found a head. Right time, too. With Sebi keen to rev up the mutual fund industry with tweaks in norms, Puri will find the tailwinds helping him.