IDFC eyes exiting AMC business in a Rs 4,000-crore deal

IDFC has begun discussions with IndusInd Bank and Citic CLSA, among others, to merge or sell its asset management company  which has AUM of Rs 71,000 crore, according to a report in The Times of India.

A fourth of the AMC’s assets under management (AUM) is equity, while the rest is debt. If the deal goes through, it would act positive for IDFC as it would improve its capital position.

Citic CLSA and private equity firms like Apax Partners have expressed early interest in a deal, the report stated. The deal will fetch IDFC about Rs 4,000 crore, 6 percent of the assets under management of IDFC Asset Management.

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These exploratory talks would gain momentum only after IDFC allows potential bidders to conduct due diligence, sources told the paper. 「This could be either through a merger or a partnership deal,」a senior official from IDFC was quoted as saying by the paper.

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Post demerger, IDFC has been restructured with IDFC (parent) at the top. At the second level is the non-operating holding financial company (NOHFC). This NOHFC has four subsidiaries, namely, IDFC Bank, investment banking, asset management and alternative fund.

IDFC is in the midst of a merger process with Capital First, a non-banking finance company. In January, the private bank agreed to acquire Capital First in a share-swap deal valued at about $1.5 billion as part of efforts to boost retail loans.

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