The Hindu Business Line : IDFC to buy StanChart India MF biz

Standard Chartered PLC has agreed to sell Standard Chartered Trustee Company Pvt Ltd and Standard Chartered Asset Management Co, which handles its mutual fund manufacturing business in India, to IDFC for a total cash consideration of $205 million (over Rs 820 crore). The consideration is before deductions for local taxes and deal expenses.

UBS pull out

IDFC will thus be paying about 70 per cent more that what UBS Global Asset Management, a leading international asset management company, had agreed to pay for the acquisition last year. UBS had struck the deal for acquiring Stan Chart’s mutual fund business in India for $120 million in January 2007.

However, the transaction, which was to be wrapped up by the second half of 2007, did not materialise, with UBS pulling out of the proposed acquisition after the sale and purchase agreement expired in December last. The deal did not get the required regulatory approvals.

Sources following the deal with IDFC say that the infrastructure finance company was not the highest bidder, but what tilted the balance in its favour was the company’s network in India and its experience in providing financial services.

Standard Chartered said in a statement that the transaction with IDFC does not include its mutual fund distribution business, which it will continue to pursue.

Wider strategy

Mr Jaspal Bindra, Chief Executive Officer, Asia, Standard Chartered, said: “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.”

Mr Rajiv Lall, Managing Director and Chief Executive Officer of IDFC, added: “We are pleased to acquire a quality asset management platform. This is in line with our wider strategy of broadening our footprint in the asset management business and diversifying our fee-based revenue streams.”

Mr Deepak Parekh, HDFC Chairman, clarified that he will not be in the IDFC mutual fund board.

Core businesses

IDFC’s existing businesses include project finance, principal investments, asset management (for third party funds), investment banking, institutional broking and advisory services. As on December 31, 2007, IDFC’s shareholders included the Government of India (20 per cent), foreign investors 49 per cent and public/others 31 per cent. IDFC’s market capitalisation is about $5.8 billion.

The transaction, which is subject to certain regulatory approvals, is expected to be completed in the second quarter of 2008.