UBS Global Asset Management today announced that it had agreed to acquire Standard Chartered's mutual fund management business in India for a total consideration of CHF 147 million (around Rs 516 crore).
The acquisition of India's ninth-largest mutual fund business was expected to add CHF 4 billion to assets under management at UBS, the Zurich-based bank said in a statement today. The Indian unit had 4 per cent of the domestic market, it added.
The transaction is structured as the acquisition of a 100 per cent interest in Standard Chartered Asset Management Company Private Ltd, and Standard Chartered Trustee Company Private Ltd, the manager and the trustee, respectively, of the mutual funds offered by the company.
The move remains subject to regulatory approval, as well as to a price adjustment linked to assets under management at closing. The acquisition included 16 mutual funds, 10 of which were fixed income, two involved "asset allocation" and four were in equities, UBS said.
UBS, the biggest manager of money for the wealthy, is competing with rivals such as Credit Suisse Group to seize a share of affluent clients in markets such as India, China and Brazil, where economic growth outpaces established economies like those in Europe.
The bank last year bought Brazil's Banco Pactual SA, an investment banking and wealth management unit, for $2.6 billion. "The total size of the Indian mutual fund market is short of $100 billion, which is a fraction of where it could be in five or 10 years," Kinner Lakhani, a London analyst for ABN Amro Holding NV, told Bloomberg.
Matthew Chan, a London-based spokesman for Standard Chartered, said India remained "a key market" for the British bank, which was focussing on its "core strengths as a distributor of third-party funds."
UBS and Standard Chartered also said they intended to form a "strategic alliance" to distribute funds in Asia, West Asia and Africa. While details were still being worked out, the deal was expected to give Standard Chartered access to the Swiss bank's asset management unit, as well as investment banking products, UBS said.
"The acquisition is a milestone in our plan to build a major presence in India's growing fund management industry and demonstrates UBS' broader commitment to this important market. It is linked to an opportunity to align us with a major distributor in the region, which will also enhance the UBS brand," said John Fraser, chairman and CEO of UBS Global Asset Management.
India's mutual fund market had grown by around 26 per cent a year since 2001, and surged 62 per cent last year, UBS said.
