HDFC Asset Management acquired Zurich Asset Management Company on Sunday in an agreement signed in London.

Deepak Parekh, chairman of the Housing Development Finance Corporation, the HDFC mutual fund and HDFC Bank, and Milind Barve, managing director of HDFC Asset Management Company, signed the agreement with Warwick Churche, chief financial officer of Zurich (Asia-Pacific) and chief executive officer (India).

Barve, speaking from London, said it would take six weeks for the transaction to be completed, including obtaining regulatory approvals. Not divulging the price, he said, "It is linked to the assets under management at the time of acquisition."

Officials close to the deal said the price ranged between Rs 150 crore (Rs 1.50 billion) and 180 crore (Rs 1.80 billion). The combined equity assets of the funds stood at around Rs 1,000 crore (Rs 10 billion), with Zurich's equity assets contributing Rs 570 crore (Rs 5.70 billion), Barve said.

He pointed out that the fund house's equity portfolio was one of the reasons prompting the acquisition.

HDFC Asset Management is a joint venture with Standard Life Investments Ltd (UK). On February 28, 2003, it had assets worth Rs 6,905 crore (Rs 69.05 billion) under management, and Zurich India had Rs 3,332 crore (Rs 33.32 billion).

With this acquisition, the HDFC mutual fund becomes the second largest private fund, running neck-to-neck with Prudential-ICICI Mutual Fund.

Some realignment in responsibilities is also in the offing. Prashant Jain, chief investment officer at Zurich, will join HDFC Asset Management as head of equities.

Rajiv Shastri, fund manager at HDFC Asset Management will become chief of fixed income and Pankaj Chopra will be heading client funds. Sanjoy Bhattacharyya will continue as the chief investment officer of HDFC Asset Management.

Zurich's India based risk-engineering business, Zurich Risk Management Services Ltd, will continue unaffected by the sale of the asset management business.

Indian and foreign asset management companies had been eyeing Zurich's assets in India ever since rumours of them being up for sale surfaced in October 2002.

The fund has seen large redemptions in the past months, fuelled by the news of its sale.

"The decision to sell this business has been taken in light of our recently announced strategy to allocate our capital to core life and non-life insurance markets in order to generate sustained profitable growth," Sandy Leitch, chief executive officer of Zurich Financial Services (UK and Asia-Pacific) said, in a release issued by HDFC Asset Management.

"We are pleased that a business with the reputation and track record that HDFC brings will now take on the management and will provide continuity of the excellent service and fund performance that Zurich Asset Management Company unit holders have enjoyed."

"This acquisition is consistent with our strategy of continuing the momentum in the growth of HDFC's mutual funds business," Parekh was quoted as saying.

The fund house was recently awarded the CNBC-Moody's Investor Service award for the best performing fund house in the one-year category.

Zurich received the award in the three-year category. The investment philosophies of the two funds were aligned, Barve said.