EXCLUSIVE: Blackstone, Bandhan Bank and IndusInd Bank in race for IDFC Mutual Fund

Blackstone, Bandhan Bank, IndusInd Bank race for IDFC Mutual Fund

Private equity giant Blackstone, Bandhan Bank and IndusInd Bank are said to be among the entities that have bid for IDFC Mutual Fund.

Potential buyers including banks, asset management companies, fintech startups and PE firms submitted their expressions of interest for IDFC’s mutual fund business before the February 1 deadline, people aware of the matter said.

The most aggressive bids were from Bandhan Bank and IndusInd Bank, the people said. Both are said to be keen to get a foothold in the fast-growing mutual fund pie.

Existing asset management companies HDFC MF, Nippon India AMC and Invesco MF were also said to be among the bidders, seeking to add Rs 1.2 lakh crore of IDFC MF’s assets under management to their AUMs.

Fintech startup Navi MF and Groww, which entered the mutual fund segment recently, expressed interest in acquiring IDFC MF. An acquisition of this size would propel the startups into the big league right away.

PE firms Blackstone and Avendus are also in the reckoning. Blackstone recently picked up a controlling stake in wealth management company ASK Group, which puts them in a regulatorily acceptable position to bid. Blackstone had earlier failed to acquire L&T Mutual Fund due to complications in regulatory approvals.

IDFC did not immediately respond to a query from Moneycontrol. IDFC had decided to divest its mutual fund business in September 2021. Its mutual fund business is ranked the ninth-largest Indian AMC.

"Bandhan Bank has placed no such bid," a spokesperson for the lender said.

Bidders will next be invited to sign non-binding agreements and the prospective buyers will get a chance to conduct due diligence and revise their bids accordingly.

IDFC MF has 64 percent of its AUM in fixed income and 26 percent in equity. Normally, a larger debt portion depresses valuations. However, in IDFC MF’s case, its profit-generating capability may hold it in good stead.

IDFC MF reported a profit after tax of about Rs 80 crore in the first half of FY22, which is likely to double for the full year. Additionally, the quality of its debt portfolio, which has successfully navigated several credit accidents, will bode well for it.