Flipkart co-founder Sachin Bansal in talks to buy Essel's mutual fund arm

Flipkart co-founder Sachin Bansal is in talks with Essel group to buy its mutual fund (MF) business, according to people in the know. “We are in talks with a few interested parties. We don’t want to give out names, as no deal has been finalised yet,” Essel Finance said in a response.
 
The people said Srei, which had earlier entered into a non-binding agreement with Essel Finance, was still in the running even though a deal was yet to materialise on account of differences over valuations.
 
An email query sent to Sachin Bansal did not elicit any response at the time of going to press.
 
After quitting Flipkart, Bansal has set up BAC Acquisitions (BACQ), which has started to look for investment opportunities in the banking, financial services and insurance (BFSI) space.
 
According to people in the know, a deal could fructify soon, given Essel Finance has zeroed in on a bidder that is willing to offer more favourable terms.
 
Industry players said newer companies are looking to enter the Rs 25-trillion MF industry, given its huge potential due to under-penetration. One of the fastest ways to enter the space is to buy an existing player, they added.
 
The domestic MF industry is 11 per cent of India’s GDP. Analysts point out that the share of the MF industry is significantly lower when compared to other emerging market economies such as Brazil (59 per cent of GDP) and South Africa (49 per cent of GDP).
 
After seeing a period of slowdown, equity flows have started showing strong signs of recovery. In June, equity flows jumped 42 per cent on a month-on-month basis to Rs 7,663 crore.
 
The mutual fund industry has also started seeing some pick-up in deal activity over the past few months.
 
Last month, Canada-based financial services group Manulife announced a Rs 243 crore-deal to acquire 49 per cent stake in Mahindra MF.
 
The deal valued Mahindra MF at 10 per cent of its total assets. Earlier, Nippon Life agreed to pick up the 42.8 per cent stake held by Reliance Capital in the MF business.
 
The deal was part of Anil Ambani group’s asset monetisation plans.
 
Essel group has been looking to improve its liquidity position by exiting some of its non-core businesses, as well as getting strategic investments into its core business, such as its flagship company Zee Entertainment.
 
 

                          Deal or no deal

• Bansal enters fray to buy Essel MF
• Talks with others (including Srei) yet to materialise with Essel
• Official announcement likely to be made soon
• Essel MF has AUM of Rs 1,040 crore