Bandhan Financial Holding-led consortium has made a definitive agreement to acquire IDFC Asset Management Company and IDFC AMC Trustee Company for ₹4,500 crore, reported Business Standard. The deal is subject to necessary regulatory approvals.
Bandhan Financial Holding is the holding company of private sector lender Bandhan Bank. The consortium also includes private equity firm ChrysCapital and Singapore's sovereign fund GIC.
In the consortium, the equity pattern is 60 percent for Bandhan Financial Holding and 20 percent each for the other two partners, wrote Business Standard.
The deal will allow the Bandhan group to enter India's mutual fund business, which currently manages ₹38 trillion of assets.
Bandhan Bank sells products from nearly 8 to 10 mutual funds. However, the group did not clarify how it will market the products of IDFCMF once it takes over after regulatory permission from Sebi and RBI.
“The Bandhan consortium was selected through a highly competitive divestment process which witnessed strong participation from strategic players and financial investors. This is a highly tracked acquisition and will be the largest deal in the Indian asset management industry to date,” said IDFC said in a statement.
Karni S Arha, managing director of Bandhan Financial Holdings Limited said: “Bandhan has always focused on financial inclusion and making formal financial services available to the masses. We believe that the asset management industry will be one of the fastest growing segments in the Indian financial services industry and hence has been identified as a key vertical in our future growth plans.”
“This transaction is a significant milestone in our plan of unlocking value and the consideration demonstrates strong position of IDFC AMC in the Indian Mutual Fund space. We have achieved signing within 6 months of the Board’s decision to divest, which further demonstrates IDFC Board’s commitment to consummate the merger of IDFC Limited and IDFC Financial Holding Company with IDFC First Bank,” Anil Singhvi, Chairman of IDFC Limited commented on the deal.
Citigroup Global Markets India Private Limited acted as the exclusive financial advisor and Cyril Amarchand Mangaldas as the legal advisors to IDFC Limited.
IDFC announced the sale of its mutual fund business after the company faced shareholders’ ire on delay in divestments and mergers. In the last financial year, the fund house reported its profit after tax at ₹144 crore as compared to ₹79.4 crore in fiscal 2020.