Axis Mutual Fund, IIFL Mutual Fund and ICICI Prudential Mutual Fund have emerged as the top three contenders to buy the mutual fund business of L&T Finance Holdings Ltd, three people aware of the matter said.
Apart from these three asset management companies (AMCs), at least three investment firms have also shown interest in buying a minority stake in L&T Mutual Fund, the people cited above said on condition of anonymity. According to the first person, these include Avendus Capital and private equity players including New York-based Blackstone Group and ChrysCapital, which are looking for 10-15% stake. The suitors are attracted by the potential of a profitable exit whenever the fund house gets listed, this person added.
So far, only AMCs are publicly listed—HDFC Mutual Fund and Nippon India Mutual Fund (erstwhile Reliance Nippon Asset Management).
“AMCs are available at low valuations now. So, the prospects of exiting investment with a relatively much higher valuation in the event of listing exists, which is attracting PE players," the first person added.
According to data provided by Value Research Online, a Delhi-based mutual fund (MF) tracker, L&T MF had 31 schemes with net assets under management (AUM) of ₹58,147 crore at the end of May. L&T MF has 16 equity schemes, which contribute a net AUM of ₹29,823.85 crore. These include L&T Nifty 50 Index Fund ( ₹28.64 crore) and L&T Nifty Next 50 Index Fund ( ₹15.46 crore). Value Research compiles data on the basis of fund fact sheets filed by AMCs.
L&T Finance acquired its mutual fund business in two parts: first by acquiring DBS Cholamandalam Asset Management in 2009 and then by acquiring the Indian operations of Fidelity Investments in 2012.
According to data from the Association of Mutual Funds in India, in the March quarter L&T MF had average AUM of ₹71,056 crore, IIFL AMC Ltd, ₹1,832.44 crore, Axis MF, ₹1.38 trillion, and ICICI Prudential MF, ₹3.51 trillion.
An L&T spokesperson said: “We do not comment on speculation."
Both Axis MF and ICICI Prudential MF spokespersons said the AMCs “do not comment on market speculation".
“We continuously examine new opportunities as per our regular business operations and have nothing specific to share on this," said an IIFL spokesperson. Blackstone and Avendus spokespersons also declined to comment.
Citigroup Global Markets and JPMorgan have been appointed as the merchant banks for the sale of L&T Mutual Fund, said the second person.