Ballooning losses at IDBI Bank may have prompted LIC to sell-off the bank’s mutual fund arm IDBI AMC.
KKR-backed Avendus is in the fray to acquire IDBI Asset Management Company, months after talks fell through in its attempt to buy IDFC Asset Mutual Fund.
Along with Avendus, four other fund houses—Mahindra, IIFL, Edelweiss and Motilal Oswal are said to be in the fray to acquire IDBI AMC, sources told Moneycontrol.
While Avendus declined to comment, IIFL said in an email response that it is yet to evaluate IDBI AMC. Mahindra AMC said, “We cannot comment on any speculation.”
Aashish Somaiyaa, Managing Director and Chief Executive Officer, Motilal Oswal AMC, said, "There is no such move from our side."
An e-mail sent to Edelweiss AMC did not elicit a response.
Going by the market grapevine, LIC is seeking a valuation of Rs 350-400 crore for IDBI AMC, which is four percent of its total asset under management (AUM) of Rs 9,297 crore as of March-end.
Generally, fund houses are valued at 4-5 percent of their total AUM.
Last week, IDBI Bank had floated a request for proposal (RFP) to divest complete stake in the AMC.
According to media reports, IDBI Bank has appointed ICICI Securities to advise it on the sale of its mutual fund business. IDBI AMC, IDBI MF Trustee Co, and the bank have invited expression of interest (EoI) from buyers by June 10.
The move comes after LIC acquired 51 percent stake in IDBI Bank in January. Earlier, there was speculation that IDBI AMC will get merged into LIC Mutual Fund.
Fund officials said ballooning losses at IDBI Bank may have prompted LIC to sell-off the bank’s MF arm IDBI AMC.
In FY19, IDBI Bank reported a net loss of Rs 15,116 crore as against a net loss of Rs 8,238 crore in FY18.For Avendus, this is its second attempt in going the inorganic route, within a year. In November last year, Avendus Capital Pvt had sought a deep valuation cut in IDFC's mutual fund business. Avendus had agreed to a valuation of less than Rs 2,000 crore, against IDFC’s expectations of Rs 3,500-4,000 crore for buying out IDFC AMC.
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