Bandhan-led consortium plans to scale up IDFC AMC business

The Bandhan Financial Holdings (BFHL)-led consortium, which will acquire IDFC Asset Management Co, will be looking to scale up the mutual fund business by strengthening its product portfolio by introducing more equity-oriented funds and enhancing distribution networks to attract retail investors.

The boards of IDFC Ltd and IDFC Financial Holding Company on Wednesday approved the sale of IDFC Asset Management Co Ltd to a consortium, led by BFHL, the holding company of Bandhan Bank, for Rs 4,500 crore. The AMC currently manages mutual fund assets worth Rs 1.25 trillion. Assets under management under equity funds stand at around 25%.

BFHL managing director Karni S Arha said the acquisition is expected to be completed in the next 9-12 months after getting all the regulatory approvals. “The completion of the acquisition will take time as all the consortium members will have to get these approvals individually,” Arha told FE.

The BFHL consortium includes Lathe Investment Pte, an affiliate of Singapore’s GIC, and Tangerine Investments and Infinity Partners, affiliates of ChrysCapital. While BFHL will hold 60% in the AMC, GIC and ChrysCapital will hold 20% each.

According to sources, after acquiring IDFC Asset Management Co, the consortium will be looking to strengthen its product portfolio by introducing more equity-oriented funds. Notably, IDFC MF has been largely debt-oriented with around 75% of its assets under management being under debt funds.

The consortium will also be looking to enhance the distribution networks for the mutual fund business by tying up with universal banks and small finance banks (SFBs).

IDFC AMC, which was established in 2000, is India’s ninth largest asset manager by AUM.

According to Arha, BFHL is looking at entering the insurance space within the next two years. “We will be looking at both organic and inorganic routes to enter the insurance space. Inorganic route would be comparatively easier to commence a new business,” he added.

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