idfc mutual fund: Team Bandhan leads race to buy IDFC mutual fund

A consortium led by Bandhan Financial Holdings, the promoter of Bandhan Bank, is said to be in pole position to win the bid for IDFC’s mutual fund business in a deal valued at around ₹4,500 crore, edging out a consortium led by Invesco, people with knowledge of the matter said.

The Bandhan consortium also includes Singapore’s sovereign wealth fund GIC and local private equity firm ChrysCapital. The deal for IDFC Asset Management Co is expected to be sealed at the parent company’s board meeting on Wednesday and the decision should be communicated to the winners in the evening, the sources said. Bandhan Group founder Chandra Shekhar Ghosh declined to comment. The IDFC did not immediately respond to an email sent Tuesday evening seeking comment.

“There was fierce competition between the consortia led by Bandhan and Invesco,” a person familiar with the matter told ET.

Second big purchase

The group led by US investment firm Invesco includes private equity funds Warburg Pincus and Kedaara Capital.

The acquisition, if completed, will expand Bandhan Group’s presence in the financial services sector. This will be the group’s second major purchase. The first, mortgage lender Gruh Finance, had helped Bandhan diversify and reduce its exposure to the unsecured lending segment.

Bandhan Financial Holdings would use part of the ₹10,600 crore it received from the dilution of the stake in Bandhan Bank to pay for the acquisition, the people said.

The Bandhan Group had indicated that it planned to enter mutual funds and life insurance to offer its customers a range of financial services. However, regulations do not allow a bank to venture into other businesses, and the holding company will be used for such operations.

Established in 2000, IDFC Asset Management is the ninth largest asset management company in India with assets worth 1.26 lakh crore under management as of the end of December 2021. It recorded a net profit of 144 crore ₹ during the 2021 financial year. Last September, the boards of directors of IDFC Ltd and IDFC Financial Holding Co approved a proposal to divest the mutual fund business.

Dolores W. Simon