Stanchart Likely To Call Off AMC Deal With UBS

MUMBAI: Standard Chartered is likely to call off the deal with Swiss giant UBS to take over its asset management operations in India. StanChart is expected to make an official announcement over the next fortnight. Incidentally, a host of overseas players have already kicked off talks with StanChart in this regard.

Sources pointed out that the timeline given by StanChart to UBS for the deal to be completed expires at the end of this month. According to sources, a host of foreign mutual funds have started discussions with StanChart in the past one week. Some of the interested parties, which are believed to have shown interest include Credit Suisse, Morgan Stanley, Goldman, Lotus and Aviva. Incidentally, Aviva had been one of the highest bidders for the AMC before it walked out of the race, leaving UBS as the sole contender. However, these names could not be confirmed. Sources said the talks are at a very preliminary stage.

ET had reported on December 15 that the deal, which was signed in January this year, has come a cropper with RBI rejecting the application of UBS. UBS is said to have re-applied to RBI. However, it is unlikely to get an approval in the next few days.

When contacted, a StanChart spokesperson said: “At this point of time, we would not like to comment on the transaction.” A UBS official had earlier said: “UBS considers its discussions with regulators to be confidential. We would not presume to pre-empt the regulatory approval process by commenting further.” The official added that he did not want to add to the earlier response.

UBS had already received Sebi and FIPB approval. Once the decision is taken by StanChart, it will have to go back to Sebi. Sources said the central bank has blocked the deal citing existing restrictions on transfer of shares in a non-banking finance company. Here, the asset management company (AMC), which manages the MF schemes is an NBFC. A secondary transaction entails a transfer of the NBFC licence, which can be cleared only by RBI. The central bank is learnt to have conveyed its decision about a month ago, following which UBS has put in a fresh application.

StanChart has to date not booked the sale proceeds in its accounts as it was subject to regulatory approvals. StanChart had sold its entire stake in Standard Chartered Asset Management Company Private and Standard Chartered Trustee Company Private to UBS Global Asset Management for around $120 million.

StanChart owns 74.99% in the AMC, while the bulk of the balance is with the Atul Choksey group of companies. Mr Choksey is said to have sold his stake to UBS in the AMC for Rs 129 crore. If one includes the valuations paid to Mr Choksey, UBS has paid around 5% of the AUM.