Morgan Stanley gives up, sells out to HDFC MF

After Fidelity last year, Morgan Stanley became the second global asset management major to give up on the Indian mutual fund business as HDFC Mutual Fund announced that it had acquired all eight fund schemes of the American company.

In a press statement, HDFC MF CEO Milind Barve said, “HDFC Mutual Fund has acquired a portfolio of strong performing domestic mutual fund schemes from Morgan Stanley and this acquisition is another step towards expanding our mutual fund customer base. We look forward to welcoming the investors in the eight schemes of Morgan Stanley Mutual Fund into the HDFC family." HDFC has paid Rs 170 crore for the schemes.

However, Morgan Stanley’s India fund business was tiny in every context. Despite trying for close to two decades, its Rs 3,300-odd crore asset base was barely 0.3 per cent of the Indian fund industry’s size. It's also tiny compared to acquirer HDFC Mutual Fund’s Rs 1.03 lakh crore asset base and won’t have a significant impact on its business.

In terms of quantitative impact, this is a minor acquisition. However, its qualitative impact will be considerable, reinforcing the impression that the Indian fund management business is increasingly unattractive for global players and that they do not see much of a future here.