The shares will be purchased through IDFC Financial Holding Company, a wholly-owned subsidiary of IDFC.
"The transaction is in line with the terms of the shareholders agreement that we signed with Natixis six years ago," IDFC Managing Director and Chief Executive Officer Vikram Limaye told PTI.
In December 2010, Natixis had entered into a share purchase agreement to pick stake in IDFC AMC and IDFC AMC Trustee.
As part of the agreement, there was a requirement that both shareholders would review the partnership at the end of five years.
Following a review clause in the agreement, IDFC "agreed to acquire through IDFC Financial Holding Company the balance stake (about 25 per cent) in IDFC AMC and IDFC AMC Trustee from Natixis Global Asset Management", the financial major said in a filing.
It has agreed to buy the stake for Rs 244.24 crore.
The deal, subject to regulatory approvals, is expected to conclude by the end of this month.
IDFC AMC is among the top 10 firms in the mutual fund space with an assets base of Rs 57,998 crore at the end of December quarter. The turnover of the fund house stood at Rs 325 crore at the end of March 31, 2016.
Currently, there are 42 players in the mutual fund industry that manage assets worth more than Rs 17 lakh crore.
"Our agreement with Natixis had a clause which required us to distribute all our international products through Natixis only but after the conclusion of deal we will own 100 per cent of the business then we have the flexibility to think about exploring distribution and or strategic partnerships with others as well.
IDFC AMC, which manages a range of funds across debt and equity classes, has several new products in credit and balance fund category.
Limaye said that the company is focusing on portfolio management services (PMS) business quite aggressively.