IDFC has bought the mutual fund manufacturing business of Standard Chartered in India for a total cash consideration of approximately USD205 million. The consideration is before deductions for local taxes and deal expenses.

The companies purchased under the deal include Standard Chartered Trustee Company Private Limited and Standard Chartered Asset Management Company Private Limited, besides some minorities. The transaction does not include Standard Chartered's mutual fund distribution business which Standard Chartered will continue to pursue.

This transaction is subject to certain regulatory approvals and other closing conditions, and is expected to complete in the second quarter of 2008.

Earlier CNBC-TV18 had reported quoting sources that the deal is at 70% higher valuation to what UBS was to pay StanChart. UBS was to buy StanChart MF for USD 120 million. The other bidders for StanChart MF were Indiabulls and Shinsei Bank.

CNBC-TV18 Analyst Payal Bhattar said that two months after StanChart walked out of its deal with UBS, its finally zeroed down on a new suitor for its Indian mutual fund. CNBC-TV18 first reported this deal and now its official. IDFC is buying StanChart Mutual Fund.

It's not quite a timeless wait for StanChart Mutual Fund after all. Even though its taken nearly two years for the fund's promoters to finally find a suitable suitor, the wait may have been well worth it because of the valuations.

Infrastructure finance company –IDFC has bagged the fund house for USD 205 million.

That is nearly 70% more than the USD 120 million that Swiss Bank - UBS had offered to buy it for in January 2007. With the deal in limbo for a year and with the market losing ground over the past few weeks, one would wonder how StanChart pulled this off.

The answer lies in the valuations that larger players are demanding. Reliance Capital sold about 5% of its MF for Rs 500 crore and UTI Mutual Fund is believed to be looking for an enterprise value of close to a billion dollars. These are values that have raised the expectations of the industry.

That is reason enough for StanChart's promoters to laugh all the way to the bank, despite the fact that the fund houses’ AUMs have grown just 10% this past year compared to the industry's 50% growth.

At USD 205 million, StanChart Mutual Fund is valued at about 6% of its total assets under management and nearly 20% of its equity assets.

Sources say that IDFC was not the highest bidder. They explain that Indiabulls and Japanese bank - Shinsei may have bid higher.

IDFC's winning card some say was its institutional backing and the fact that it was willing to retain the management of the fund house.