Bandhan-led consortium buys IDFC's mutual fund business for Rs 4,500 cr

Singapore's sovereign wealth fund GIC, private equity player ChrysCapital are partners of the consortium

Bandhan Financial Holding-led consortium has entered into a definitive agreement to acquire IDFC Asset Management Company and IDFC AMC Trustee Company for Rs 4,500 crore, subject to receipt of necessary regulatory approvals, an official said on Wednesday.

Bandhan Financial Holding is the holding company of private sector lender Bandhan Bank.

The consortium led by it also includes private equity firm ChrysCapital and Singapore's sovereign fund GIC. In the consortium, the equity pattern is 60% for Bandhan Financial Holding and 20% each for the other two partners.

Bandhan Financial is also the holding company of Kolkata-based private sector lender Bandhan Bank. The deal will allow the Bandhan group to enter India’s growing mutual fund business, which currently manages Rs 38 trillion of assets.

Bandhan Bank itself sells products from some 8-10 mutual funds. However, the group did not clarify how it will market the products of IDFC MF 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.

Anil Singhvi, Chairman of IDFC Limited commented: “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. The Bandhan consortium with its strong brand and resources will further strengthen distribution of products and improving overall experience for IDFC AMC’s investors and distributors.”  

Karni S Arha, Managing Director, 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. The acquisition of IDFC AMC provides us with a scaled‐up asset management platform, with a stellar management team and a pan India distribution network."

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 MF business after the company faced shareholders' ire on delay in divestments and mergers.

In the last financial year, the fund house saw its profit after tax at Rs 144 crore compared to Rs 79.4 crore in FY20.