IDBI Bank looks to sell MF arm to Edelweiss

Mumbai: IDBI Bank is in the final stages of negotiations with Edelweiss Mutual Fund to sell its mutual fund arm IDBI AMC in its effort to get out of prompt corrective action and free up capital.

Edelweiss Mutual Fund is the frontrunner to buy out IDBI Mutual Fund. The mandate for the sale is with ICICI Securities. As on March 31 this year, IDBI Bank held 66.67 per cent stake in IDBI AMC while 33.33 per cent was held by IDBI Capital Markets and Securities.

“Edelweiss AMC is the front runner to buy out IDBI Mutual Fund,” said a source close to the development. “There are two other MFs which had shown interest as well.”

The total asset under management (AUM) of IDBI Mutual Fund declined to Rs 5,381 crore as on September 30, 2019, from Rs 6,238 crore in March 31, 2019, due to a decrease in equity and liquid AUM. Its AUM was Rs 7,241 crore in March 31 last year.

An industry expert said IDBI Mutual Fund is valued between Rs 400 crore and Rs 450 crore. In a recent deal in June, Mahindra & Mahindra Finance sold 49 per cent stake in Mahindra AMC to Canada-based investment firm Manulife for a consideration of $35 million.