UBS to buy StanChart MF for Rs 650 cr

Swiss banking major UBS Bank is close to acquiring Standard Chartered Mutual Fund for Rs 650 crore (Rs 6.5 billion).

Sources close to the developments said the company would announce the deal any day. Morgan Stanley is advising Standard Chartered on the deal.

As per the deal, there will be a three-year agreement between the two parties, wherein Standard Chartered MF will be distributing the fund with 'preferred status'.

UBS became the frontrunner for Standard Chartered Mutual Fund after Aviva, the biggest insurance group in the UK, had walked out of the bidding process for reasons not known.

Stanchart MF has assets under management of Rs 12,628 crore (126.28 billion) as on December 31, 2006. StanChart's official spokesperson said, "We are in the process of reviewing our mutual fund business and are re-evaluating option." UBS spokesperson could not be contacted for comment.

UBS has offered to pay 5 per cent of StanChart MF's AUM for the acquisition. Aviva was the highest bidder for the Standard Chartered Mutual Fund and had offered 6 per cent of its AUM.

Standard Chartered AMC, which is growing fast in the country, was put on the block, as internationally the bank did not have presence in asset management business. It is learnt that all the existing team members, as per the proposal, would be retained by the new management.

StandChart's exit comes at a time when several global players are looking to enter the booming Indian mutual funds space.

Credit Suisse, Korea's Mirae Asset, JP Morgan, Japan's Nikko and Shinsei Bank are the other global players that have planned forays into the country's mutual fund business.