HDFC buys Morgan Stanley’s India business in major MF deal

HDFC Mutual Fund on Monday bought out its smaller rival Morgan Stanley Mutual Fund, which runs eight schemes with assets worth Rs3,290 crore, in a major consolidation within the multi-player MF sector.

Announcing the agreement, HDFC Asset Management Company managing director Milind Barve refused to disclose what the deal was worth. "We have signed a definitive agreement to acquire all the eight schemes of Morgan Stanley Mutual Fund in India. The agreement is subject to regulatory approvals … the average combined assets under management of the eight schemes for the quarter ended 30 September 2013 was Rs3,290 crore,'' he said.

The deal will help in increasing customer base of HDFC Mutual Fund, which is already India's largest MF house, with assets under management (AUM) of well above Rs1 lakh crore.

The US-based financial services giant Morgan Stanley obtained registration with the Securities & Exchange Board of India (SEBI) to run a mutual fund business in 1993; and its first scheme was launched a year later.

At the end of 30 November, total AuM of Morgan Stanley's mutual funds rose to Rs8.9 lakh crore from Rs\7.01 lakh crore as on 31 March 2013.

There are over 45 fund houses in the country, but SEBI chairman U K Sinha has been saying that there is a case for consolidation in the asset management industry due to presence of some non-serious players.

According to an estimate, mutual funds have lost over 20 lakh investors, measured in terms of individual accounts or folios, in the first seven months of the current financial year (2013-14).

Folios are numbers designated to individual investor accounts, although one investor can have multiple folios.