NIIF announces acquisition of IDFC IFL amid liquidity crunch in NBFC
Government-backed fund NIIF Wednesday announced an acquisition of controlling stake in IDFC-IFL for an undisclosed amount, amid report of a liquidity crunch in the NBFC sector.
Earlier in the day, IDFC Ltd in a stock exchange filing said that IDFC Infrastructure Finance Limited (IDFC-IFL) will sell controlling interest in its arm to National Investment and Infrastructure Fund II.
"This acquisition is the first investment from NIIF's Strategic Fund and the first control transaction for NIIF. The acquisition is subject to approval from (the) RBI and customary closing conditions," the fund manager said in a statement.
IDFC Ltd, IDFC Financial Holding Company Ltd (IDFC FHCL) and IDFC Infrastructure Finance Ltd (IDFC IFL) have entered into a definitive agreement with NIIF II in this regard, IDFC said.
"Pursuant to the said agreement, NIIF II shall acquire controlling interest in IDFC IFL from IDFC FHCL," the filing added.
It manages over USD 3 billion of capital commitments across three funds, including NIIF II, each with its distinct investment strategy, as per the company website.
This acquisition will conclude on the receipt of the requisite regulatory approvals, including from the Reserve Bank of India.
National Investment and Infrastructure Fund Limited (NIIFL) is an investor-owned fund manager, anchored by the government in collaboration with leading global and domestic institutional investors.
Finance Minister Arun Jaitley Tuesday held a high-level meeting with financial sector regulators and discussed interest rates and liquidity issue faced by the non-banking financial companies.
The Financial Stability and Development Council (FSDC) headed by the finance minister decided that the regulators and the government will keep a close watch on the developing situation and take all necessary measures.
The council discussed at length the issue of real interest rate, current liquidity situation, including segmental liquidity position in NBFCs and mutual fund space, an official statement had said after the meeting.
Stock of IDFC Ltd traded 1.25 per cent higher at Rs 36.55 on BSE.
(With inputs from agencies.)