(The author is a Reuters Breakingviews columnist. The opinions
expressed are his own)
By Jeff Glekin
MUMBAI Jan 17 (Reuters Breakingviews) - T. Rowe Price
of the United States owns 26 pct of UTI, the Indian
fund manager. But it can't seem to agree with co-shareholders
about who should run the business. Delhi may well want its say
too. Resolution is required. The best way forward might be to
embrace firm-but-quiet compromise.
Price, a venerable name in U.S. asset management, acquired
its stake in its Indian counterpart two years ago. It invested
$140 million, taking 6.5 percent stakes from four heavy-hitting,
state-run, financial institutions that used to control all of
As one of Asia's oldest and biggest firms with a huge
distribution network in India, UTI seemed a good fit for T.
Rowe. But trouble started brewing when UTI's chairman and
managing director, U.K. Sinha was tapped by the finance ministry
to head India's securities market regulator. Sinha was backed by
the finance minister's top advisor, Omita Paul.
As might be expected, UTI's board appointed a committee to
identify a successor. Global headhunters Egon Zehnder
shortlisted candidates, and the committee also met with Jitesh
Khosla, a senior government official. It did not recommend his
candidature to the board: but according to some reports Khosla,
brother of Omita Paul, is preferred by UTI's four Indian
Some, meanwhile, suspect that since the plum UTI job is
usually reserved for a senior bureaucrat, the finance ministry
wants it to stay that way. Price, it is assumed, would like to
see a candidate appointed on merit alone.
Little has been said in public about the affair. But
disagreements about succession would explain the interim
appointment, after nearly a year, of Imtaiyazur Rahman.
Indecision is also hurting the business. UTI's assets under
management have slipped 7 percent since February 2011 as India's
fund management industry rose 2 percent.
Resolution is required. And if the direct and indirect
owners - which include the India state -- cannot agree on one
candidate, they might consider splitting the post to make a CEO
and chairman. It could neatly enhance UTI's corporate governance
standards at the same time as giving all parties the voice they
The softly-softly approach requires patience, but could
bring the best long term results for the international incomer
and the Indian incumbents.
-- UTI Asset Management Company, the oldest mutual fund
manager in India, appointed an interim chief executive officer
on Jan. 13. It is promoting chief financial officer Imtaiyazur
-- Rahman will lead until a final decision is taken on
appointment of a chairman and managing director. UTI's last
chairman and managing director, U.K. Sinha, left to become
chairman of the Securities and Exchange Board of India, the
financial regulator, in February 2011.
-- According to India media reports, the government would
like to see Jitesh Khosla at the helm of UTI. Khosla, is an
Indian civil servant currently serving as the Additional
Secretary, Government of Assam. He has held several senior
positions in the Finance and Commerce Ministries. He is the
brother of Omita Paul, a senior advisor of Finance Minister
-- Life Insurance Corporation of India owns an 18.5 percent
stake in UTI, as does State Bank of India, Punjab National Bank
and Bank of Baroda.
-- Breakingviews approached T. Rowe Price who declined to
comment on why it had taken over a year to appoint event an
-- Reuters: T. Rowe Price CEO stands by Indian joint venture
(Editing by Robert Cole and David Evans)