UK-based Standard Chartered PLC is divesting its mutual fund assets in India to Infrastructure Development Finance Company for $205 million, subject to the usual approvals and closing conditions and is expected to be completed in the second quarter of 2008.

The transaction does not include Standard Chartered's mutual fund distribution business, which the British bank will continue to operate.

The two financial groups today signed an agreement for the Indian company to acquire 100-per cent stake in two standard Chartered subsidiaries - Standard Chartered Asset Management Company Pvt Ltd and Standard Chartered Trustee Company Pvt Ltd that represent the UK bank's mutual fund business in India.

The asset management company had had assets of about Rs14,625 crore at the end of January 2008.

Early last month Reserve Bank of India had disallowed the Swiss bank group UBS, hit by exposures in the US sub prime mortgage market, from acquiring Standard Chartered Asset Management Company.

The UK-based bank, which has been keen to divest the mutual fund business, had received expressions of interest from about 40 financial services groups including Japan's Shinsei Bank, Credit Agricole, Mirae Asset Group and Goldman Sachs.

"IDFC is a well respected financial services company and we are delighted to have reached an agreement with them for the sale of this business," said Jaspal Bindra, chief executive officer - Asia. "Standard Chartered will remain a distributor of asset management products in India. India is a key market and delivered record results in 2007."

Dr Rajiv Lall, managing director and chief executive officer, IDFC, "We are pleased to acquire a quality asset management platform. This is in line with our wider strategy of broadening our footprint in the asset management business and diversifying our fee-based revenue streams."

On 29 February Standard Chartered had announced having received all the required approvals leading to the completion of its acquisition of American Express Bank Ltd (AEB) for a total cash consideration of $823 million, and is said to be among the two front runners to acquire an equity stake in Rana Kapoor-promoted Yes Bank.