UBS Global Asset Management announced today that it has agreed to acquire Standard Chartered’s mutual funds management business in India for 147 million Swiss francs ($139.24 million).

The transaction involves the acquisition of a 100% interest in Standard Chartered Asset Management Co. Private Ltd., as well as Standard Chartered Trustee Co. Private Ltd, the manager and trustee, respectively, of the mutual funds offered by the company. The deal 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 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. It is the ninth largest mutual fund manager in India with a 4% share of the domestic market.

“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 the Asia Pacific region. “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 market in India is worth about CHF 91 billion and has grown by around 26% annually since 2001. The growth rate surged to higher than 62%, in 2006. UBS says that 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.