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IDFC Board approves disinvestment of mutual fund business

IDFC Board approves disinvestment of mutual fund business

The firm explained that the Board of Directors have authorised respective Strategy & Investment Committees to take necessary steps, including the appointment of Investment Banker, for the same

IDFC Non-Executive Chairman Vinod Rai IDFC Non-Executive Chairman Vinod Rai

The Board of Directors of IDFC Limited and IDFC Financial Holding Company Limited met on Friday, September 17, where they considered and approved steps to divest the mutual fund business, IDFC Asset Management Company (IDFC AMC) Limited.

IDFC, in an official statement, stated the disinvestment of IDFC AMC would be subject to requisite regulatory approvals, as applicable.

The firm explained that the Board of Directors have authorised respective Strategy & Investment Committees to take necessary steps, including the appointment of Investment Banker, for the same.

IDFC AMC is an indirect subsidiary of IDFC and a direct subsidiary of IDFC Financial Holding Company Limited. According to The Hindu Business Line, as of March 31, 2021, IDFC owned a 99.96 per cent stake in IDFC AMC.

For the April-June quarter, IDFC AMC's average assets under management (AAUM) stood at Rs 1,26,070 crore, according to the daily.

Earlier at a pre-annual general meeting (pre-AGM) held on September 14, IDFC investors had expressed disappointment over the slow pace of the disinvestment process.

One investor wanted IDFC to disinvest its mutual fund business immediately. The investor stated that if this fails, they will reach out to other investors in a bid to change the management of the firm. While another investor alleged value destruction for shareholders of the company, while referring to the performance of the stock.

IDFC Non-Executive Chairman Vinod Rai explained to investors that it has taken the firm 3-4 years to simplify the corporate structure. He added the firm has managed to remove all other entities except the Bank, IDFC AMC and the IDFC Foundation.

"Now, what we are grappling with today is the IDFC Foundation. It has two joint ventures under it - one is with the Government of Delhi and another is with the Government of Karnataka," said Rai.

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