IDFC buys StanChart AMC for $205 million

Deal does not include mutual fund distribution business.

Infrastructure Development Finance Company (IDFC) has bagged Standard Chartered's asset management business (AMC) in India for a total consideration of $205 million (around Rs 820 crore) in an all-cash deal.

This amounts to 5.67 per cent of the total assets under management of Rs 14,141 crore of StanChart's AMC as on February-end.

The deal comes after the Reserve Bank of India, in December, rejected Swiss major UBS AG's last year's bid to buy StanChart's MF business for Rs 516 crore, which was 4 per cent of the total AUM of Rs 12,628 crore.

This deal, like the ill-fated UBS' bid last year, however, does not include StanChart's mutual fund distribution business, which the London-based bank will continue to pursue in India.

"IDFC is a well respected financial services company and we are delighted to have reached an agreement with them for the sale of this business. Standard Chartered will remain a distributor of asset management products in India. India is a key market and delivered record results in 2007," said Jaspal Bindra, chief executive officer, Asia, Standard Chartered.

The transaction, which is subject to regulatory approvals, is expected to be completed in the second quarter.

Rajiv Lall, managing director and chief executive officer of IDFC, said: "This is in line with our wider strategy of broadening our footprint in the asset management business and diversifying our fee-based revenue streams."

"We have also bought out Atul Choksey's stake in Standard Chartered mutual fund. Valuations aren't cheap. Nevertheless we went ahead with the deal as we want to create an impact in the asset management business in the next 3-4 years. Naval Bir Kumar will continue to head the mutual fund business," Lall added.

According to sources, IDFC will be also retaining the existing staff of StanChart MF. The employees have been offered a hefty stay-on bonus.

The sale of the Indian mutual fund business to UBS, which was part of Standard Chartered Plc's strategy to exit this segment globally, had run into trouble with the central bank on issues relating to alleged money laundering through the Swiss bank by Pune stud farm owner Hassan Ali Khan.

Apart from IDFC, Japanese major Shinsei Bank, Indiabulls and Credit Agricole were the other contenders for the StanChart AMC.

ALL CASH DEAL

Deal amounts to 5.67 per cent of the total assets under management of Rs 14,141 crore of StanChart's AMC as on February-end

In December 2007, the Reserve Bank of India, rejected Swiss major UBS AG's last year's bid to buy StanChart's MF business for Rs 516 crore, which was 4 per cent of the total AUM of Rs 12,628 crore

IDFC will be retaining the existing staff of StanChart MF. The employees have been offered a hefty stay-on bonus

The transaction, which is subject to regulatory approvals, is expected to be completed in the second quarter