Seven Suitors’ Line Up For Stanchart’s MF Business

The race for Standard Chartered Mutual Fund is in the last lap, with around seven suitors in the fray, including Credit Agricole, Shinsei and IDFC. The price tag is $200 million, up from $120 million that UBS was willing to pay last year.

Initially there were 20 fund houses in the race including three from India. The base price for the deal was $137.5 million. In the final round, the lowest bid has been for $175 million while some were above $200 million.

Other players in the final leg are Fortis, Aviva, Mirae, a US fund major and a Middle East player. Incidentally Fortis is in the final stages of taking over ABN Amro’s AMC business in the country as part of its global deal past year. ABN Amro has assets under management of Rs 8529 crore as on the end of January. StanChart has AUMs of Rs 13,118 crore. The AMC which focused on debt schemes forayed into equity two years ago; today it has around 30% of its AUMs in stocks —something that has pushed up the valuation.

As a part of the erstwhile deal with UBS, employees were to be given a retention bonus. This time depending on the final deal, either StanChart or the new buyer will give the bonus to the employees. The core team is expected to remain in place. Sources maintain that any new buyer would not only takeover the AMC’s assets but its team.

The deal between StanChart and UBS was canceled as the latter failed to secure the Reserve Bank of India approval for the deal. When contacted, StanChart officials refused to comment on the process. Though StanChart would be more amenable to an overseas player taking over the fund, as it would mean a possible tie-up to distribute funds internationally, it is not against a domestic entity like IDFC.

It’s perceived that a local buyer may be quicker in getting regulatory approvals.

Last year when the British bank tied up with UBS to sell the AMC business, it had also said that Standard Chartered Wealth Management will form a strategic alliance with UBS Global Asset Management to distribute mutual funds in Asia, Africa and the Middle East. It would look at a similar model this time too.