Avendus Capital open to acquisition in asset management space: Alok Vajpeyi, Chairman

KKR-controlled Avendus Capital is open to acquisitions in the asset management industry and its chief Alok Vajpeyi is quite gung-ho about it.

"We are open to acquisitions in the asset management space and we are also looking to expand our financial services portfolio," Vajpeyi, Chairman, Avendus Capital Public Markets Alternate Strategies LLP, told Moneycontrol.

According to sources, the company is exploring the possibility of acquiring IDFC Asset Management Company. Sources told Moneycontrol that Avendus is in the final stage of discussions to acquire IDFC Asset Management Company.

When asked whether the company is looking to acquire IDFC AMC, Vajpeyi refrained to comment on the specific fund house but added that the company is evaluating options in the AMC industry.

Kohlberg Kravis Roberts and Co (KKR), a global private equity (PE) firm is an investor in Avendus Capital.

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Financial investors like KKR are bullish on India's fast-growing asset management business which has been a major beneficiary of the recent shift in household savings from physical assets to financial instruments.

IDFC Mutual Fund, the 12th largest mutual fund in India by size, managed  Rs 69,574 crore as on June 30, 2018. The fund house is likely to be valued at around 6-8 percent of its total assets.

Over the last couple of decades, Avendus has transformed itself from a pure investment bank into a financial services firm spanning wealth management, credit solutions, and alternative asset management. The mutual fund business, if added, will add to its bouquet of offerings.

Among the companies that bid for IDFC AMC were BlackRock Inc, Reliance Mutual Fund, Mirae Asset Global Investments (India) IndusInd Bank and BlackRock Inc.

According to sources, the promoter of IDFC AMC was not keen to sell to AMC to an existing mutual fund player.

In March 2017, IDFC Financial Holding Company, a subsidiary of IDFC Ltd, had agreed to buy back a 25 percent stake in IDFC AMC from Paris-based Natixis Global Asset Management for Rs 244.24 crore.

IDFC is in the midst of a merger process with Warburg Pincus-owned Capital First, a non-banking finance company. In January, the private bank agreed to acquire Capital First in a share-swap deal valued at about USD 1.5 billion as part of efforts to boost retail loans.

Post demerger in October 2014, IDFC was restructured with IDFC (parent) at the top. At the second level is the non-operating holding financial company (NOHFC). This NOHFC has four subsidiaries, namely, IDFC Bank, investment banking, asset management and alternative fund.

Diversified financial services firm Infrastructure Development Finance Company Ltd (IDFC) had demerged its financial undertaking into its wholly-owned step down subsidiary IDFC Bank Ltd.