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Team Bandhan leads race to buy IDFC Mutual Fund

A consortium led by Bandhan Financial Holdings, the promoter of Bandhan Bank, is said to be in the pole position to win the bid for IDFC’s mutual fund business in a deal valued at about ₹4,500 crore, trumping an Invesco-led grouping, people with knowledge of the matter said.

The Bandhan consortium also includes Singapore sovereign wealth fund GIC and local PE firm ChrysCapital. The deal for IDFC Asset Management Co is likely to be sealed at the parent company’s board meeting on Wednesday and the decision is likely to be communicated to the winners by the evening, the people said. Bandhan Group founder Chandra Shekhar Ghosh declined to comment. IDFC didn’t immediately respond to an email sent late Tuesday seeking comment.

“There was stiff competition between the Bandhan-led and Invesco-led consortia,” a person familiar with the matter told ET.

Second Big Purchase

The group led by American investment firm Invesco includes private equity funds Warburg Pincus and Kedaara Capital.

The acquisition, if completed, will expand Bandhan Group’s presence in the financial services sector. It will be the second big purchase by the group. The first, mortgage lender Gruh Finance, had helped Bandhan diversify and reduce its exposure to the unsecured loan segment.

Bandhan Financial Holdings would use a part of the ₹10,600 crore it received from diluting stake in Bandhan Bank to pay for the acquisition, the people said.

The Bandhan Group had said that it planned to enter mutual funds and life insurance to offer customers a range of financial services. However, regulations don’t allow a bank to venture into other businesses, and the holding company will be used for such operations.

Established in 2000, IDFC Asset Management is the ninth largest asset management company in India with assets worth ₹1.26 lakh crore under management at the end of December 2021. It posted a net profit of ₹ 144 crore in fiscal 2021. Last September, the boards of IDFC Ltd and IDFC Financial Holding Co approved a proposal to divest the mutual fund business.

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