Syndicate of Bandhan Financial, ChrysCapital and GIC acquire IDFC mutual fund

IDFC Asset Management Company is being acquired by a group led by Bandhan Financial. Should investors be concerned? Continue reading to find out.

Bandhan Financial Holdings Ltd the parent business of Bandhan Bank, joins forces with private equity firm ChrysCapital and Singapore's sovereign fund GIC to acquire IDFC Asset Management Company (AMC) for Rs 4,500 crore. To date, this is the largest buyout in the mutual fund industry.

Anil Singhvi, Chairman of IDFC Limited, remarked in a press release, “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 distribution of products and improving overall experience for IDFC AMC’s investors and distributors.”

Karni S Arha, Managing Director of Bandhan Financial Holdings Ltd, stated, “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. 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.”

GIC's Chief Investment Officer - Private Equity, Choo Yong Cheen, 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.”

ChrysCapital's Managing Director, Ashish Agarwal, commented: “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.”

Will it impact the investors?

This incident will undoubtedly have an influence on investors, whether favourable or bad, time will tell. However, we would advise investors to remain patient and avoid making hasty exits from their investments. We would rather recommend that you wait and watch, revisiting your assets quarterly over the next four quarters. If you see that your performance is dropping significantly when compared to the fund’s peers, then consider leaving. But for the time being, just stay put.