IDFC's brokerage arm up for sale, receives offers from at least 5 parties

Bidding process started on Tuesday, received at least five offers including that of Axis Capital CEO Dharmesh Mehta

IDFC has put its wholly-owned brokerage subsidiary IDFC Securities up for sale. The bidding process, which started on Tuesday, has received interest from at least five parties, said industry players. 

One of the prominent bidders is Axis Capital CEO Dharmesh Mehta in his personal capacity, with the support of investors. Vikas Khemani, former Edelweiss Securities institutional equities and investment banking head, is another bidder.  

When contacted, Mehta declined to comment. IDFC Securities did not respond to e-mail queries sent by Business Standard. 

However, industry sources confirmed the development as well as Mehta’s bid, and said prominent investors like Akash Bhanshali and Renuka Ramnath might be backing Mehta’s bid. Khemani confirmed he has put in a bid. 

People in the know said others in the fray include non-banking financial companies InCred Finance and Responsive Finance, investment banking firm Equirus Capital and Responsive Finance. A message sent to an InCred Finance spokesperson remained unanswered.

IDFC Bank, another subsidiary of IDFC, has already started the merger process with Warburg Pincus-owned Capital First, an NBFC. 

The Reserve Bank of India has approved the merger of the two institutions, and also that of Capital First’s wholly-owned subsidiaries Capital First Home Finance and Capital First Securities. The new entity, called IDFC First Bank, is expected to start its operations from January, 2019. 

According to industry sources, IDFC First Bank will focus on retail business after the merger. Consequently, IDFC had identified its mutual fund and brokerage arms as non-core businesses around six months back. The idea was to sell non-core businesses before the merger. 

As far as the mutual fund arm goes, it manages a corpus of Rs 700 billion. IDFC has been talking with several private equity players for the sale. However, reports suggest that the sale to Avendus Capital has been stuck because of valuations. According to people in the know, IDFC was planning to raise around Rs 50-60 billion from the sale of the asset management company and brokerage arm. 

IDFC had acquired SSKI Securities, a brokerage firm, over a decade ago and later renamed it to IDFC Securities. In FY 18, IDFC Securities posted a net profit of Rs 233.6 million and has a net worth of Rs 1.7 billion.