UBS acquires Standard Chartered's mutual funds management business in India
UBS's commitment to India was further underlined when UBS Global Asset Management today announced that it has agreed to acquire Standard Chartered's mutual funds management business in India for a total consideration of CHF 147 million.
The transaction is structured as the acquisition of a 100% interest in Standard Chartered Asset Management Company Private Ltd, as well as Standard Chartered Trustee Company Private Ltd, the manager and trustee, respectively, of the mutual funds offered by the company. The transaction remains subject to regulatory approval as well as to a price adjustment linked to assets under management at closing.
In a separate move, UBS announced its intention to form a strategic alliance with Standard Chartered Bank for fund distribution in Asia, the Middle East and Africa. Although the scope of the agreement has yet to be finalized, it is envisaged that it will give Standard Chartered's growing retail and wealth management businesses access to UBS Global Asset Management's flagship capabilities as well as to a number of UBS Investment Bank products including structured products and, at the same time, provide momentum to UBS's third-party wholesale business in Asia.
"The acquisition is a milestone in our plan to build a major presence in India's growing funds management industry and demonstrates UBS's broader commitment to this important market. As the regulatory environment continues to develop, domestic investors will - as has been the case in other markets - increasingly look to global financial services firms to provide innovative investment solutions. The acquisition 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.
UBS expects Standard Chartered's mutual funds management business in India to have assets under management of around CHF 4.0 billion. It currently manages 16 mutual funds, 10 of which are fixed income, two asset allocation and four in equities. The equity funds represent around 19% of total assets under management.
Formerly known as ANZ Grindlays Asset Management Company, Standard Chartered Asset Management Company was incorporated in 1999. It has around 60 permanent staff members and is the ninth largest mutual fund manager in India with a 4% share of the domestic market1. It is headquartered in Mumbai and has offices in 27 other cities, including Bangalore, Chennai, Kolkata and New Delhi.
"The purchase provides UBS with a strong investment team and a broad, local distribution network throughout India. The business has an experienced management team which, in addition to founding the company, has a proven track record," said Christof Kutscher, Head of UBS Global Asset Management in Asia Pacific.
"While fixed income and money markets have been Standard Chartered's mutual funds' traditional focus representing some 80% of invested assets, equities will form an increasing proportion of assets under management. I am confident that UBS Global Asset Management will act as a powerful catalyst for this transition and allow the company to offer a diverse range of enhanced and high value-added products across all major assets classes," he added.
The mutual fund management market in India has an approximate size of CHF 91 billion and has grown by around 26% annually since 2001. The growth rate surged to higher than 62%, in 20062 . However, the continuing liberalisation of the country's pension market, relatively low penetration levels and the increasing sophistication of investors, provide significant potential for further growth.
UBS has a well established, growing presence in India, and is one of the top brokers for international investors investing in Indian equities. UBS India Securities Private Ltd's brokerage and advisory services have been available through the Mumbai office since 1990. The UBS India Service Centre, which provides knowledge services (research and analytics), business process offshoring (transaction and data processing) and IT infrastructure support, was opened in Hyderabad in June 2006.
1 Data for 31st December 2006. Source: Association of Mutual Funds in India (AMFI) (as at 10 January 2007)
2 Data for 31st December 2006. Source: Association of Mutual Funds in India (AMFI) (as at 12 January 2007)
Samantha Smith, Media Relations, London
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