IDFC shelves plan to sell AMC business

After spending months searching for a buyer, IDFC Financial Holding Company - a part of IDFC - has decided to retain its fund management business. IDFC Asset Management (AMC) will not be sold.

Moneycontrol reached out to IDFC AMC but the fund house refused to comment or confirm the news.

Two sources in the know of the development, including a senior executive, confirmed to Moneycontrol that IDFC has shelved plans to sell the asset management company. “The board of the group company felt that it makes sense to hold the fund house and grow it over time rather than sell it,” said one of the two people who spoke to us on condition of anonymity.

The other person said IDFC has now decided to focus on making its underlying businesses more retail-focused. On December 18, IDFC Bank and Capital First, a retail-focused non-banking financial company, merged to form IDFC First Bank which is said to focus mainly on building its retail loan book.

Industry officials said the fund house failed to elicit the kind of valuation it sought. The first person said that the recent spate of regulations by the capital market regulator, Securities and Exchange Board of India (SEBI) may have also impacted the fund house’s valuations, something that IDFC AMC did not accept.

Throughout the year of 2018, SEBI took a string of measures to reduce the fees that mutual fund schemes collect from investors that, many industry officials say, will impact a fund houses’ future earnings.

Industry officials had earlier told us while the fund house expected around Rs 5,000 crore, it got bids in the range of Rs 3,500 – 4,000 crore. According to investment bankers who did not wish to be named, Avendus Capital, Reliance Nippon Life Asset Management, IndusInd Bank, BlackRock Inc were among the firms that expressed interest in buying. Of the above bidders, its talks with Avendus were in the final stages. However, the deal did not go through.

Established in the year 2000, IDFC AMC is India’s 12th largest fund house. In early 2017, IDFC had bought out Natixis Global Asset Management Asia’s 25 per cent stake in the AMC. In 2010, Natixis is a French-based fund house.