British banking major Standard Chartered has agreed to sell its asset management company Standard Chartered Mutual Fund to IDFC for $205 million (Rs 820 crore).
IDFC outbid Indiabulls, South Korean fund major Mirae and Japanese group Shinsei in the final round of bidding.
The sale include Standard Chartered Trustee Co. Private Ltd and Standard Chartered Asset Management Co. Private Ltd, along with minorities, which represent its mutual fund manufacturing business in India, Stanchart said in a statement.
On March 6, Hindustan Times reported that IDFC, India Bulls and Mirae were front-runners and the deal size could be $210-225 million (Rs 840-900 crore).
Stanchart preferred IDFC for faster regulatory approvals as the government holds a significant stake in the company, sources in the investment banking circles said.
Last year, Stanchart sold the AMC business to Swiss bank UBS for $120 million, but the deal was called off due to a lack of approvals.
The acquisition marks IDFC"s entry into the mutual fund business. Earlier, it picked a 33 per cent stake in the Mumbai-based brokerage firm SSKI.
Formed as a funding firm for infrastructure development in the country in 1997, IDFC has been trying to provide a basket of investment services, including private equity, stock broking and now the mutual fund.
After the transaction, Standard Chartered will no longer manage funds in India and will focus on consumer and commercial banking. However, the bank will distribute mutual fund products.
StanChart manages over Rs 15,801 crore in its mutual fund business (February figure). The company had put its mutual fund arm for sale as the bank wants to exit the business as part of its global strategy, said analysts tracking the sector. "Moreover, the Stanchart portfolio is heavily skewed towards debt. The equity exposure is very low and hence they are not making that much revenue through the AMC business," said a Mumbai-based analyst.