A group of private equity investors including Carlyle Group, Baring Private Equity Asia and Bain Capital are in early stage talks to buy a controlling stake in India Infoline’s wealth Management business, IIFL Wealth multiple sources with direct knowledge of the matter told ET.
The buyout funds are competing with global wealth management firms such as Julius Baer and even banks like Kotak Mahindra, who also have been sounded out, the people mentioned above added.
Canadian billionaire Prem Watsa’s Fairfax Holdings and General Atlantic (GA) are looking to sell around 34.6 % stake that they hold together in IIFL Wealth.
This would be second domestic sale of such independent wealth manager in 1 year after Blackstone acquired 74% in ASK Group for $1 billion, last August.
As on Tuesday’s market capitalisation, 34.6% of IIFL Wealth is valued at ₹4,892.1 cr. The transaction may also result in a mandatory open offer to public investors to acquire an additional 26% stake.
One of the sources mentioned above also said, the two investors may sell their stakes to more than one investor.
JP Morgan is understood to be running a formal process to find a buyer, sources said.
When contacted, Carlyle, Baring, GA and Bain declined to comment.
General Atlantic had acquired a 21.6% stake in IIFL Wealth in October 2015 for ₹1,122 crore. Led by India-born Prem Watsa, Fairfax first invested in IIFL in 2011 when it acquired a 9% stake through Hamblin Watsa Investment Counsel Fund. The fund currently has around 13.6% in IIFL Wealth.
Founded in 2008, IIFL Wealth offers solutions for high and ultra-high net worth individuals, family offices and institutional clients, according to its website. The Mumbai-based firm has more than $44 billion in assets under management.
Headquartered in Mumbai, IIFL Wealth & Asset Management has more than 850 employees and a presence in 4 major global financial hubs and 23 locations in India.
IIFL Wealth reported revenues of ₹1,053 cr in FY21, compared to ₹850 cr posted during the same period a year ago. Profit after tax was at ₹369 cr as against ₹206 cr, in FY20.
“The franchisee built over the years has helped ensure low client attrition (among Indian wealth managers),” ICRA said in a note on Jan 22. “the company is expected to maintain its strong position in wealth management. The company’s profitability also remains strong. With the significant increase of 37% in the AUM, the revenues were higher in H1 FY2022 at ₹666 crore (up 37% YoY) while the cost-to-income ratio declined to 49.1% (54.3% in H1 FY2021),” Icra said.
IIFL had acquired Chennai-based wealth management company, Wealth Advisors India for ₹253.6 crore in cash in 2018. Further, the company purchased the wealth business of L&T Finance for ₹230 crore in 2020.
Wealth Management industry has suddenly become acquisition target with Blackstone buying out ASK Investment Advisors in February in a $1.2 bln deal.
Source: Economic Times