Finally, Infrastructure Development Finance Co Ltd (IDFC) has been announced as the winner for adopting Standard Chartered’s mutual fund business in India.

The decision in favor of IDFC comes out after a long drawn-out bidding process.

In an all-cash deal, IDFC will pay Rs 830 crore ($205 million) to get hold of the asset management business of Standard Chartered. This amounts to 5.67% of the total assets under management of Rs 14,141 crore of StanChart’s AMC at the end of February 2008.
 
The deal follows the RBI’s rejection of Swiss banking major UBS AG’s last year’s bid to purchase StanChart’s MF business for around Rs 516 crore, which was 4% of the total AUM of StanChart MF at that time. The UBS deal was terminated in January 2008.

Jaspal Bindra, chief executive officer, Asia, Standard Chartered said, “IDFC is a well respected financial services company and we are delighted to have reached an agreement with them for the sale of this business. Standard Chartered will remain a distributor of asset management products in India. India is a key market and delivered record results in 2007.”
 
A company release said that the recent transaction does not include StanChart’s mutual fund distribution business, which it will continue to pursue in India.

The deal, which is subject to regulatory approvals, is likely to be finished in the second quarter of 2008.

Rajiv Lall, managing director and chief executive officer of IDFC said, “This is in line with our wider strategy of broadening our footprint in the asset management business and diversifying our fee-based revenue streams.”
 
“We have also bought out Atul Choksey’s stake in Standard Chartered mutual fund. Valuations aren’t cheap. Nevertheless we went ahead with the deal as we want to create an impact in the asset management business in the next 3-4 years. Naval Bir Kumar will continue to head the mutual fund business,” Mr. Lall added.
 
According to sources, IDFC will be also retaining the subsisting employees of StanChart MF. The staff has been offered a hefty stay-on bonus.

Japanese banking group Shinsei, Korean MF Mirae, Goldman Sachs, Indiabulls and Reliance MF were also in the running at different stages of the bidding.