A consortium of Bandhan Financial, ChrysCapital and GIC buys IDFC MF

Bandhan Financial led consortium buys IDFC Asset Management Company. Should investors worry? Read on to find out.

Bandhan Bank’s parent company Bandhan Financial Holdings Ltd teams up with a private equity firm ChrysCapital and Singapore’s sovereign fund GIC to buy IDFC Asset Management Company (AMC) for Rs 4,500 crore. This is the biggest buyout in the mutual fund industry to date.

In a press release, Anil Singhvi, Chairman of IDFC Limited commented: “This transaction is a significant milestone in our plan of unlocking value and the consideration demonstrates the strong position of IDFC AMC in the Indian Mutual Fund space. We have achieved signing within 6 months of the Board’s decision to divest, which further demonstrates IDFC Board’s commitment to consummate the merger of IDFC Limited and IDFC Financial Holding Company with IDFC First Bank. The Bandhan consortium with its strong brand and resources will further strengthen the distribution of products and improve overall experience for IDFC AMC’s investors and distributors.”

“Bandhan has always focused on financial inclusion and making formal financial services available to the masses. We believe that the asset management industry will be one of the fastest growing segments in the Indian financial services industry and hence has been identified as a key vertical in our future growth plans. The acquisition of IDFC AMC provides us with a scaled-up asset management platform, with a stellar management team and a pan India distribution network. IDFC AMC could benefit significantly from the Bandhan brand and continue strengthening its position in the asset management industry. Also, we are happy to partner with marquee investors such as GIC & ChrysCapital and are confident that this venture will enhance value for all the stakeholders of Bandhan and IDFC AMC”, said Karni S Arha, Managing Director, Bandhan Financial Holdings Ltd.

Choo Yong Cheen, Chief Investment Officer - Private Equity, GIC stated: “GIC is pleased to continue our partnership with the Bandhan group and ChrysCapital through this new investment in IDFC AMC. We believe IDFC AMC is in a favourable position to capture the strong secular growth in the currently under-penetrated Indian asset management industry.”

Ashish Agarwal, Managing Director, ChrysCapital said: “ChrysCapital is very excited to partner with BFHL and GIC to buy out IDFC AMC, a quality platform with a seasoned management team. The company is well poised for the future with strong industry tailwinds including increasing financialization of savings and a growing equity culture amongst the younger generation.”

Impact on investors

This event would definitely pose an impact on the investors, positive or negative that time will tell. However, we would suggest investors calm down and do not exit their investments in haste. We would rather suggest to wait and watch and keep reviewing your investments quarterly for four quarters. If you find that the performance is exceptionally deteriorating when compared with peers, then think to exit. But as of now just stay put.