IDFC to sell MF business to Bandhan-led consortium; stock tanks 7%

IDFC and IDFC Financial Holdings will sell their entire shareholding in IDFC AMC and IDFC AMC Trustee to a consortium led by Bandhan Financial Holding Limited for Rs 4,500 crore

Shares of IDFC plunged 7 per cent to Rs 63.5 apiece on the BSE on Thursday, a day after the company announced the divestment of IDFC and IDFC Financial Holdings' entire shareholding in IDFC AMC and IDFC AMC Trustee to a consortium led by Bandhan Financial Holding Limited for Rs 4,500 crore.

"we wish to inform you that the board of directors of IDFC Limited and IDFC Financial Holding Company Limited at their respective meetings held on April 06, 2022, have inter alia considered binding bids received in connection with divestment of IDFC AMC along with IDFC AMC Trustee company Limited and have approved sale of the entire shareholding of IDFC AMC and IDFC AMC Trustee held by IDFC FHCL to a consortium comprising of Bandhan Financial Holding Limited, Lathe Investment Pte. Ltd. (affiliate of GIC), Tangerine Investments Limited, and Infinity Partners (affiliates of ChrysCapital)," the company said in an exchange filing. READ HERE

The consideration for the Proposed Transaction is Rs 4,500 crore on a fully diluted basis and is subject to customary price adjustments at the closure. This consideration is in addition to receipt of Rs 250 crore as dividend from IDFC AMC in March 2022, it added.

"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," said Anil Singhvi, chairman of IDFC Limited.  

Bandhan Financial is 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.  

"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. IDFC AMC could benefit significantly from the Bandhan brand and continue strengthening its position in the asset management industry. Also, we are happy to partner with marquee investors such as GIC & ChrysCapital and are confident that this venture will enhance value for all the stakeholders of Bandhan and IDFC AMC," noted Karni S Arha, managing director at Bandhan Financial Holdings Limited.

At 10:00 AM, IDFC was down 5.5 per cent at Rs 65 per share as against a 0.6 per cent dip in the benchmark Sensex index. Meanwhile, IDFC First Bank was down 0.35 per cent, while Bandhan Bank was up over 1 per cent.