Shares of UTI Asset Management Company (UTI AMC) surged over 18 percent after reports said that rival Tata Asset Management Company (Tata AMC) is set to buy a significant stake in the company. At 1:09 pm, shares of UTI AMC were trading at Rs 889.10, an up of 18.69 percent from the previous close on the BSE.

Tata AMC is set to acquire a significant stake in UTI mutual funds, CNBTC-TV has learnt. The UTI mutual fund is the eighth largest AMC in India with assets in excess of 1.50 lakh crore.

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Tata AMC comes lower down the line with assets of about Rs 85,000 crore as of March end. Now, if the deal goes through, the combined entity could become the sixth largest AMC in India.

Who is selling stake in UTI AMC?

CNBC-TV18 has learnt that it is the combination of PNB, SBI, BOB and LIC. Now, each of these entities holds between 10 to 15 percent stake. The combined stake is about 45 percent. This is the stake, which could probably be offloaded to Tata AMC.

M&A has been picking up in the mutual fund industry over the last few years. Therefore, this could be another step towards privatisation. Performance could be on the anvil.

But some in the industry are also questioning that since the clutch of four government-owned entities is looking to offload stake, there is a possibility or there is a question whether this was a deal which was struck along with the Air India deal. Tata AMC has offered no comments on this.