IDFC Limited on Wednesday announced the sale of its mutual fund business to a consortium headed by Bandhan Financial Holdings4,500 crore for a consideration of Rs. The deal is subject to necessary regulatory approvals.
“IDFC Limited and Bandhan Financial Holdings Limited, (Singapore-based Sovereign Wealth Fund) GIC and (Private Equity Firm) ChrysCapital have entered into a definitive agreement to acquire IDFC Asset Management Company Limited and IDFC AMC Trustee Company Limited from IDFC Limited. ” IDFC Ltd said in a statement.
The deal is up for consideration of Rs 4,500 crore, subject to receipt of necessary regulatory approvals and customary closing conditions, the statement said.
Bandhan Financial is the holding company of Kolkata-based Bandhan Bank. IDFC Limited and IDFC Financial Holding Company Limited in their board meeting in September 2021 approved the disinvestment of their mutual fund business.
“The Bandhan consortium was selected through a highly competitive disinvestment process that saw strong participation from strategic players and financial investors. This is a highly tracked acquisition and will be the largest ever deal in the Indian asset management industry, IDFC said in a statement.
The deal will allow Bandhan Group to enter India’s growing mutual fund (MF) industry, which manages assets worth Rs 38 lakh crore. Established in 2000, IDFC AMC has assets (AUM) of over Rs 1.15 lakh crore under management for over 1.5 million investor folios representing premier institutions, corporates, family offices and individual clients at the end of March 31, 2022. manages. It is one of the top 10 MF companies in India.
In FY 2020-21, the fund house saw profit after tax of Rs 144 crore as compared to Rs 79.4 crore in FY 2020. Generally, deals in MFs range between 5-7 per cent of AUM.
Anil Singhvi, Chairman, IDFC said, “This transaction is a significant milestone in our plan to unlock value, and the idea reflects IDFC AMC’s strong position in the Indian mutual fund space. which demonstrates the commitment of the IDFC Board to complete the merger of IDFC Limited and IDFC Financial Holding Company with IDFC First Bank.”
He said that the Bandhan consortium with its strong brand and resources will further strengthen the distribution of products while improving the overall experience for the investors and distributors of IDFC AMC.
Karni S Arha, Managing Director, Bandhan Financial Holdings said, “The acquisition of IDFC AMC provides us with an advanced asset management platform with a stellar management team and a pan-India distribution network. IDFC AMC can benefit significantly from the Bandhan brand. and can continue to strengthen its position in the asset management industry.”
He added that he is happy to partner with leading investors like GIC and Chris Capital and is confident that this venture will add value to all stakeholders of Bandhan and IDFC AMC.
Chu Yong Chen, Chief Investment Officer (Private Equity), GIC, said: “GIC is delighted to continue our partnership with Bandhan Group and Chris Capital through this new investment in IDFC AMC. We believe IDFC AMC is in a favorable position to capture the strong secular growth in the currently weak Indian asset management industry.”
Ashish Agarwal, Managing Director, ChrysCapital said, “ChrysCapital is excited to partner with BFHL and GIC to acquire IDFC AMC, a quality platform with an experienced management team. With strong industry tailwinds including increased financialization of savings and a growing equity culture amongst the younger generation, the company is well positioned for the future.”
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