IDBI Bank Ltd has initiated the process of selling its mutual fund business, Mint reported.
“IDBI Bank has appointed ICICI Securities Ltd to advise it on a 100% sale of its mutual fund business, IDBI Asset Management Ltd and IDBI MF Trustee Co. Ltd. The bank has invited expression of interest from buyers by 10 June,” a senior official of the bank told Mint.
“Mutual fund businesses are generally valued at 4-5% of their assets under management . So, the sale of the business could fetch the bank ₹360-450 crore,” he added.
The Life Insurance Corporation of India has 51% stake in the IDBI Bank which has announced to sell its mutual fund business.
The mutual fund business of the debt-laden lender has assets under management (AUM) of more than ₹9,000 crore, an anonymous source told Mint.
Apart from the mutual fund business, the IDBI Bank also wants to sell its stake in IDBI Federal Life Insurance Co. Ltd, a three-way joint venture between IDBI Bank, Federal Bank and Belgian insurer Ageas.
IDBI holds 48% stake, while Federal Bank and Ageas own 26% each.
However, the bank’s gross non-performing assets (NPAs) improved slightly to 29.67% in the third quarter from 31.78% in the July-September period. Whereas, its net NPAs stood at 14% against 17.30% in the preceding quarter.
In January, IDBI Bank had told the exchanges that its board has approved a proposal to resume the process of divesting its stake in the life insurance business.