IDFC Ltd, which is in the process of selling its broking business, IDFC Securities, received bids on Wednesday from at least four suitors, including Axis Capital chief executive Dharmesh Mehta, said three people aware of the development. “IDFC had invited bids from interested suitors for the sale of the securities business and today was the last day to submit bids. Five parties have bid for the asset, including a business house. IDFC investment banking, which is part of IDFC Bank, is also likely to be part of the sale,” said one of the persons cited above, requesting anonymity.
The remaining bidders include Vikas Khemani of Carnelian Capital, who was previously heading the institutional sales and investment banking business of Edelweiss Financial Services; investment banking and broking firm Equirus Capital; and InCred Finance, led by former Deutsche bank senior executive Bhupinder Singh.
According to the second person, Mehta is likely to move out of Axis Capital along with a few of his teammates if his bid is successful. “While the other suitors don’t have an existing similar business, Mehta runs a similar business and will be moving in with a few of his existing teammates at Axis Capital if his bid succeeds. He has also tied up some financial investors to back him in this acquisition,” the person said, also requesting anonymity.
A third person aware of the sales process said that bids of ₹100-200 crore have been received for the asset. “Khemani has bid aggressively and might emerge as the highest bidder. He has also managed and scaled up similar businesses at Edelweiss and that might work in his favour.”
Mint could not independently ascertain the bidding amounts.
Email queries to Mehta, Axis Bank, Equirus Capital and InCred did not elicit any response till the time of going to press. IDFC declined to comment on the development. Khemani confirmed submitting a bid, but declined to divulge any details.
The sale of IDFC Securities is part of IDFC group’s plans to sell its non-core assets. It has already sold its infrastructure asset management business to Global Infrastructure Partners, besides its infrastructure debt fund platform to the National Infrastructure and Investment Fund (NIIF). IDFC Ltd is building its banking operations with a strong focus on retail clientele, as it tries to shed its image of an infrastructure financier.
On 7 November, Mint reported that Avendus, which is in talks to acquire IDFC Mutual Fund is seeking a steep cut in valuation from ₹3,500-4,000 crore to less than ₹2,000 crore, considering that it would not have the support of IDFC’s marketing team, in addition to the asset management company’s falling profits and limited product offerings.
For the year ended 31 March 2018, IDFC Securities posted a profit of ₹23.35 crore, more than double the previous year’s profit of ₹11.18 crore. Its revenue was at ₹104.8 crore, an increase of 26% from ₹75.4 crore in the previous year.
Axis Capital, the investment banking arm of Axis Bank, offers advisory services across equity capital markets, private equity, structured finance and institutional equities. Last fiscal, it closed 49 deals across equity capital markets and advisory businesses, and five private equity and five M&A transactions.
Source: Mint