Housing Development Finance Corporation (HDFC) has increased its stake in its asset management joint venture with UK insurer Standard Life. The deal values the mutual fund arm at Rs 1,836.46 crore among the highest valuations for a mutual fund in recent times, reports ET. In a statement issued here, HDFC said the country’s largest mortgage finance company and Standard Life have decided to realign their shareholding in HDFC AMC.

"Accordingly, HDFC on Monday increased its stake in HDFC Asset Management Company (HDFC AMC) by acquiring 9.90% stake from Standard Life Investments, (SLI, Investment arm of Standard Life, UK) at an aggregate consideration of Rs 181.81 crore. This acquisition will take the Corporation’s shareholding in HDFC AMC to 60% while SLI retains the balance 40%," the statement said.

However, in terms of percentage of assets under management (AUM), the valuation of the company works out to 4.44% of assets under management. The statement said the two would remain the co-sponsors of HDFC Mutual Fund.

HDFC AMC is the investment manager to HDFC Mutual Fund with funds under management of Rs 41,333 crore as of September 30, 2007. It is the third-largest private sector mutual fund with equity assets constituting approximately 44% of the total funds under management. In addition, HDFC AMC also provides portfolio management and advisory services to domestic and offshore clients with funds under management of approximately Rs 11,434 crore as of September 30, 2007, making the total assets under management of Rs 52,767 crore. HDFC Mutual Fund has been a late entrant, setting up shop only in July 2000.

The fund has, however, managed to ramp up sales rapidly to move to the number three slot. Part of the growth was inorganic, following the acquisition of Zurich Asset Management Company in 2003 after Zurich Financial Services decided to sell off its asset management business.

The rise in equity markets has resulted in several foreign investors showing interest in moribund asset management businesses. In recent years, several foreign fund managers have bought stake in public sector funds. This includes the deal by Robeco in Canbank MF and BNP stake purchase in Sundaram and SocGen participation in SBI MF.

More recently in January, UBS Global Asset Management bought Standard Chartered Bank’s mutual fund business for $ 120 million. HDFC’s insurance partner Standard Life, which demutualised, has recovered and is now looking at acquisition in the UK.