Muthoot Finance to buy IDBI Bank’s MF business: Report

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Gold loan financier Muthoot Finance is in the advanced stages of acquiring IDBI Bank's Asset Management Ltd, according to a report by Mint.

“The deal is expected to close this week," a person who is aware of the development told the newspaper. "Initially, the binding offers had come in from Muthoot Finance and Vikas Khemani’s Carnelian Capital Advisors LLP."

In FY19, IDBI Asset Management, also referred to as IDBI Mutual Fund, managed 22 schemes comprising 12 equity fund schemes, six debt fund schemes, two hybrid fund schemes, one Gold Fund of Funds and one Gold Exchange Traded Funds scheme.

According to the company's website, IDBI Asset Management's total assets under management (AUM) fell 16% year-on-year (y-o-y) to Rs 6,238 crore in FY19 due to a decrease in equity and liquid AUMs. The company plunged to a loss of Rs 4.34 crore in FY19 from a year-earlier profit of Rs 8 crore. Its revenue from operations fell 25% y-o-y to about Rs 60 crore.

IDBI Bank, which owns 66.67% stake in IDBI Asset Management, is burdened with bad loans and is seeking to sell non-core assets, including equity stakes. The remaining 33.33% stake in IDBI Asset Management is held by IDBI Capital Markets and Securities.

In the July-September period, IDBI Bank reported its 11th straight quarterly loss with net loss narrowing to Rs 3,459 crore from Rs 3,602.49 crore a year earlier.

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