Muthoot Finance to acquire IDBI Bank's MF business for Rs 215 crore

Muthoot Finance, the country's largest gold financing company, on Friday said it has entered into an agreement to acquire IDBI Bank's mutual fund unit, marking its entry into mutual fund asset management space.

Muthoot Finance, in an exchange filing, on Friday said it has agreed to acquire IDBI Asset Management Ltd and IDBI MF Trustee Company or a total consideration of Rs 215 crore.

"Upon completion of the transaction, Muthoot Finance will purchase 100 per cent equity shares of IDBI Asset Management Limited and IDBI MF Trustee Company," the gold financing company said in a filing to the Bombay Stock Exchange.

The company said the transaction is expected to be completed by end of February 2020, subjected to requisite approval from the regulators including Securities and Exchange Board of India. ICICI Securities acted as the advisors to IDBI Bank.

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Promoted by IDBI Bank, IDBI Mutual Fund is one of the profit making asset management company in the mutual fund space with an assets under management (AUM) of over Rs 5,300 crore. As on March 31, 2019, IDBI Bank held 66.67 per cent stake in IDBI Asset Management and 33.33 per cent holding in IDBI Capital Markets and Securities.

In May this year, IDBI Bank invited expression of interest for its mutual fund business to ease the burden of mounting bad loans. The lender has the worst asset quality among Indian banks. The LIC-controlled bank, which has been under the prompt corrective action of the RBI for more than a year, reported gross NPA ratio at 29.43 per cent in September quarter of this fiscal, while the net NPA ratio stood at 5.97 per cent.

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Commenting on the development, George Alexander Muthoot, Managing Director of Muthoot Finance said, "IDBI Mutual Fund is a trusted player in the mutual fund space with a steady loyal customer base. At Muthoot we pride ourselves in venturing into mutual fund space through such an established player."

"We are excited to venture into this new path in the financial services space and we are equally excited to partner with strong, experienced and enthusiastic management team at IDBI Mutual Fund as we embark upon the next level of our journey, he added.

Ahead of the announcement, Muthoot Finance share price closed 0.27 per cent lower at Rs 685.15 apiece on the BSE on Friday.

Edited by Chitranjan Kumar