IDFC announces sale of mutual fund business to Bandhan-led consortium for Rs 4,500 Crore

IDFC Ltd on Wednesday announced the sale of its mutual fund business to a consortium led by Bandhan Financial Holdings, for consideration of Rs 4,500 crore. The agreement is subject to the necessary regulatory approvals.

“IDFC Limited and a consortium comprising Bandhan Financial Holdings Ltd, (Singapore 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 “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 Bandhan Bank, based in Kolkata. In September 2021, IDFC Limited and IDFC Financial Holding Company Limited at their board meeting approved the divestiture of its mutual fund business.

“The Bandhan Consortium was selected following a highly competitive divestment process that saw strong participation from strategic players and financial investors. This is a well-watched acquisition and will be the largest transaction of its kind in the Indian asset management industry to date,” IDFC said in the statement.

The deal will allow Bandhan Group to enter the growing mutual fund (MF) industry in India, which manages Rs 38 lakh crore in assets. Established in 2000, IDFC AMC manages over Rs 1.15 lakh crore in assets under management (AUM) as of the end of March 31, 2022, for over 1.5 million investor folios representing institutions, corporates, leading family offices and individual clients. It is among the top 10 MF companies in India.

In FY2020-21, the fund house saw its profit after tax at Rs 144 crore compared to Rs 79.4 crore in FY20. Typically, transactions in MF take place between 5 and 7% of assets under management.

IDFC Chairman Anil Singhvi said, “This transaction is an important step in our plan to unlock value, and the consideration demonstrates IDFC AMC’s strong position in the Indian mutual fund space. We secured the signature within six months of the Board’s decision to divest, further demonstrating the commitment of the IDFC Board to complete the merger of IDFC Limited and IDFC Financial Holding Company with IDFC First Bank. »

He added that the Bandhan Consortium, with its strong brand and resources, will further strengthen the distribution of products improving the overall experience of IDFC AMC investors and distributors.

Managing Director of Bandhan Financial Holdings, Karni S Arha, said: “The acquisition of IDFC AMC provides us with a large-scale asset management platform, with an exceptional management team and a pan-European distribution network. -Indian. IDFC AMC could significantly benefit from the Bandhan brand and continue to strengthen its position in the asset management industry.”

He added that he was pleased to partner with reputable investors such as GIC and ChrysCapital and is confident that this venture will increase value for all Bandhan and IDFC AMC stakeholders.

Choo Yong Cheen, Chief Investment Officer (Private Equity) of GIC, said, “GIC is delighted to continue its partnership with Bandhan Group and ChrysCapital through this new investment in IDFC AMC. We believe that IDFC AMC is in a favorable position to capture the strong secular growth of India’s currently underpenetrated asset management industry. »

ChrysCapital Managing Director Ashish Agarwal said, “ChrysCapital is delighted to partner with BFHL and GIC to acquire IDFC AMC, a quality platform with a seasoned management team. The company is well prepared for the future with strong tailwinds to the sector, including an increasing financialization of savings and a growing culture of equity among the younger generation.”

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Dolores W. Simon