Bandhan Financial Holdings won the bid to buy IDFC Asset Management Firm in a deal valued at 4,500 crore, marking the entry of a financier that began its life as a bottom-of-the-pyramid lender into the ritzy business of asset management dominated by bulge-bracket financial groupings such as ICICI, HDFC and the State Bank of India. This is the main deal to date in the Indian asset management space.
The consortium led by the Kolkata-based owner of Bandhan Bank trumped the US based Invesco that
partnered with buyout firm Warburg Pincus and Kedaara Capital, paying 3.6% of the assets under management. The winning group includes Lathe Investments Pte. Ltd, an affiliate of Singapore sovereign wealth fund GIC, and local private equity fund ChrysCapital.
JM Financial was advising the Bandhan-led consortium in the deal.
Addition of mutual funds business to Bandhan's portfolio of tiny, small- ticket and housing loans would improve its ability to cross sell financial products to millions of clients who do not have access to savings instruments.
"Invesco wanted to have more time for due diligence while the seller was hurrying to close the deal," said an executive familiar with the matter. This added to the advantage of the Bandhan group, which is on an extension spree with ready resources.
Mutual funds business is among the fastest growing segment of the Indian financial services as record low interest rates are leading to savers moving away from conventional bank deposits. Furthermore, the high returns of the past two years and the tighter regulations have led to mutual funds becoming safer and higher yielding investments.