IDFC buys Standard Chartered Mutual Fund: What’s for the investors?

IDFC, Infrastructure Development Finance Corporation (IDFC) emerged as the winner among other bidders like Shinsei Bank & Indiabulls to acquire Standard Chartered Mutual Fund for a staggering amount of $205 million.
This is the first ever instance where a domestic financial organization has managed to get hold of a foreign mutual fund business.
As per the news, initially RBI had disallowed Swiss Bank UBS to acquire Stanchart AMC. UBS at that time was paying $120 mn for the deal. It is interesting to note that a local financial institution acquiring such a big fund house, which might pave the way for other domestic players to try and get hold of their foreign counterparts. Though domestic players like Indiabulls were in the race, but it ultimately went to a government backed body.
Standard Chartered MF has around Rs.14000 crore in assets of which Rs.4000 crore is in equity while rest is in debt.
IDFC is one of India’s oldest lending institutions, and the deal would give it a foothold int the retail sector and improve its high margin fee based income.
As per the terms of agreement of takeover, the Standard Chartered organization will continue to distribute mutual fund products but will not manage funds and would only focus on consumer and commercial banking. IDFC will be taking up the charge of managing the mutual funds and taking investment decisions.

Related: Should you trust your fund manager?

What will change for the investors of Standard Chartered Mutual Funds?
Though in a nutshell, nothing will change. But in the long run, the fund managers of IDFC may adapt to a completely different style of investments,

which adheres more to the IDFC standards, instead of Standard Chartered Mutual Fund criteria. Do not expect any relief in terms of entry load, exit load, fund management charges, etc. They are not going to reduce.

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