LIC Mutual Fund acquires IDBI Mutual Fund: Here's what you should do

That LIC Mutual Fund is taking over IDBI Mutual Fund is a piece of news that could be seen a mile away. Why? By becoming a major shareholder of IDBI Bank (the sponsor of IDBI Mutual Fund), LIC had become the promoter of two fund houses - LIC Mutual Fund and IDBI Mutual Fund - something that's not legally permitted. As per SEBI regulations, a parent group cannot have more than 10 per cent stake in multiple AMCs. Hence the merger. This marriage of two rather mediocre and less popular fund houses is more a matter of regulatory compulsion than an outcome of any strategic synergies. In an industry of 40 mutual funds houses, IDBI is currently ranked 31st by assets under management (AUM), while LIC is only a few notches higher at 24. Their combined entity won't move any mountains, either. With an AUM of just Rs 22,500 crore, they'll still be ranked 24th. So, if you thought they'd enjoy scale advantages, strike that off as well. Contours of the merger The merger is expected to be complete by the end of July 2023. The ten IDBI mutual funds that have an investment mandate similar to existing LIC funds will be absorbed by the latter. And the ten IDBI funds that don't overlap with other LIC funds will continue to exist, though under the latter's name. Refer to the tables below for details and our analysts' opinions on the surviving schemes. Details of merging schemes Transferor scheme Surviving scheme VR category Analysts' opinion IDBI Banking & Financial Services LIC MF Banking & Financial Services Sectoral-Banking Avoidable