Bandhan Financial, ChrysCapital and GIC team up to buyout IDFC Mutual Fund for ₹4,500 cr


MUMBAI :

A consortium of Bandhan Bank’s parent Bandhan Financial Holdings Ltd (BFHL), private equity firm ChrysCapital and Singapore’s sovereign fund GIC will acquire IDFC Asset Management Co. Ltd for 4,500 crore, in the biggest buyout yet in India’s 38 trillion asset management industry.

In a statement issued on Wednesday, Infrastructure Development Finance Co. Ltd, the parent of IDFC AMC, said the Bandhan-led consortium was selected through a “highly competitive divestment process”, and the deal envisages continuity of the current management team and investment processes at IDFC AMC.

“This will be supplemented well by Bandhan’s brand as well as GIC’s and CC’s international network and experience, which will aid IDFC AMC in further cementing its position in the asset management industry and propel further growth,” IDFC said.

IDFC AMC, the ninth-largest mutual fund in the country, had assets under management (AUM) of 1.15 trillion as of 31 March. Accordingly, the deal valued IDFC AMC at 3.9% of its latest AUM.

While the transaction aids IDFC’s plan to exit non-core businesses and reverse-merge with IDFC Bank Ltd, it also helps Bandhan Financial make a beachhead in India’s fast-growing MF industry.

Said Anil Singhvi, chairman of IDFC, “This transaction is a significant milestone in our plan of unlocking value, and the consideration demonstrates the strong position of IDFC AMC in the Indian mutual fund space. We have achieved signing within six months of the board’s decision to divest, which further demonstrates IDFC board’s commitment to consummate the merger of IDFC Ltd and IDFC Financial Holding Co. with IDFC First Bank.”

The Bandhan-led consortium beat private sector lender IndusInd Bank Ltd and another consortium led by American fund manager Invesco to win IDFC AMC, two people aware of the matter said.

“ChrysCapital will be spearheading the consortium as far as leadership management and the business structure post the buyout by the Bandhan Financial-led consortium is concerned. The deal has been finalized at 4,500 crore, which is 2.2% of IDFC AMC’s average AUM for March quarter,” one of the two people said on condition of anonymity. He added that as IDFC AMC has more debt-oriented MF schemes, the deal has been done somewhat at the lower end of the average industry valuation given for acquiring mutual fund businesses.

Ashish Agarwal, managing director of ChrysCapital, said, “ChrysCapital is very excited to partner with BFHL and GIC to buy out IDFC AMC, a quality platform with a seasoned management team. The company is well poised for the future with strong industry tailwinds including increasing financialization of savings and a growing equity culture among the younger generation.”

“While Bandhan Bank will bring in 60% of the investment to acquire IDFC AMC, ChrysCapital and GIC will invest 20% each to acquire the mutual fund business entirely from the shareholders of IDFC,” the person cited earlier said.

Last week, IDFC’s investment banker Citigroup Global Markets, submitted its proposal to the board with the names and bids of finalists.

The proposed sale of IDFC AMC is in line with IDFC Group’s objective to reverse-merge with IDFC First Bank Ltd and focus on banking operations after selling off profitable non-core assets. Karni S. Arha, managing director of Bandhan Financial Holdings, said, “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.”

On 24 February, Mint reported that the Hinduja family led IndusInd Bank Ltd was one of the top three contenders to buy IDFC AMC.

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