IDFC Ltd said on Wednesday that it will sell its mutual fund business to a consortium led by Bandhan Financial Holdings for Rs 4,500 crore. The transaction is subject to regulatory clearances. This is a highly-tracked merger that will be the largest in the Indian asset management business to date.
The 4,500 Crore deal allows the Bandhan group to enter India’s growing mutual fund business. Bandhan Financial is also the holding company for Bandhan Bank, a private sector lender located in Kolkata that sells products from about eight to ten mutual funds.
Given the Sebi rules, Mergers do happen. A mutual fund taking over another mutual fund is not unheard of. It is a case of a foreign AMC taking over a local fund house with the IDFC-Bandhan merger. In keeping with the purchasing AMC’s plan, there will very certainly be a strategic shift.
The purchase of IDFC AMC, according to Karni Arha, Managing Director of Bandhan Financial Holdings Limited, offers Bandhan a scaled-up asset management platform, a fantastic management team, and a pan-India distribution network. Bandhan has always prioritized financial inclusion and providing formal financial services to the general public. Karni Arha expressed his belief that asset management will be one of the fastest expanding divisions of the Indian financial services industry.
According to IDFC, the decision to combine with Bandhan was made after detailed research. The consortium led by Bandhan Financial Holding was chosen after a very competitive divestiture process that included significant participation from strategic stakeholders and financial investors.
Industry Experts believe that This deal is a significant step forward in our objective to unlock wealth, and the consideration underscores IDFC AMC’s strong position in the Indian mutual fund industry.
Yet Experts recommend patiently waiting for a clear picture before doing anything. Recommendations include keeping an eye on whether the fund house is conducting business as normal. Check to see if there have been any changes in strategy or important personnel. This might indicate that the new management intends to make certain changes.