IDFC to buy StanChart MF for Rs 830 cr

Infrastructure Development Finance Corporation (IDFC) will buy Standard Chartered Mutual Fund. IDFC will pay $205 million (Rs 830 crore), way above $135 million (Rs 542 crore), the amount offered by UBS for the AMC in January last year. Standard Chartered has agreed to sell Standard Chartered Trustee and Standard Chartered Asset Management, including the local minority shareholders. The UK major has a 74.9% stake in the AMC with the remaining being held by Atul Choksey, the former co-founder of Asian Paints. The consideration is before deductions of local taxes and deal expenses. ET had on Thursday reported that IDFC and Shinsei were ahead in the race. StanChart regional CEO (India and South Asia) Neeraj Swaroop said: “We will concentrate on the distribution side of the business.” This means the bank will continue to sell products of other fund houses. IDFC CEO Rajiv Lall 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.” What may have swung the deal for IDFC is the consideration that a local institution would be quicker in getting regulatory approvals. IDFC and Japanese group Shinsei had emerged as the frontrunners in what has been a long drawn race. After the deal with the Swiss banking group UBS fell through, Standard Chartered had invited fresh bids in January. The sale fell through as UBS was not able to get a regulatory approval. Following this, close to 20 players — mostly international — had shown interest. A few weeks ago, StanChart had shortlisted around seven players. The minimum bid price was $175 million as against a base price of $137 million, quoted by StanChart. IDFC is said to have initially bid $175 million, but reportedly revised its bid to around $205 million. Shinsei is also said to have bid around $200 million. Sources said the top 10 employees in the fund will get a retention bonus, which would be staggered over 18 to 24 months. The payment is likely to be around $3 million. This transaction is expected to be complete in the second quarter of 2008. As on February 29, 2008, Standard Chartered MFs assets under management stood at Rs 14,180 crore. Around $1 billion (approx Rs 4,000 crore) of this is equity