Reliance Mutual, HDFC, State Street Corp & seven other funds in final lap for Fidelity's India mutual fund business.

About ten funds, including Reliance Mutual, HDFC, and State Street Corp, have been shortlisted to buy Fidelity's India mutual fund business, people close to the transaction said. The winner is expected to be selected some time in April from a second shortlist of five, they added.

JP Morgan, which is advising Fidelity on the transaction, is said to have compiled a shortlist of ten from the 22 funds, who submitted expressions of interest. Of these ten, Fidelity India will recommend the five "best names" to its parent to take the transaction forward, a person close to the development said.

The shortlisted asset management companies include Reliance Mutual Fund, HDFC Mutual, ICICI Prudential, Birla Sunlife Mutual Fund, Invesco, Mitsubishi UFJ, Mizhuo Asset, Pramerica and State Street Corp.

Almost all these institutions have bid for Rs 350-Rs 500 crore, another highly-placed official at Fidelity told this paper. The price values the mutual fund at 4-5.8% of its total assets under management of Rs 8,700 crore, lower than Fidelity's expectation of 6.5%.

A Fidelity spokesperson declined comment on speculations or rumours. Spokespersons of all the domestic mutual funds declined comment to an email questionnaire from ET.

Though Fidelity has drawn a shortlist, it is not clear whether the deal will also include the equity fund management team, which the fund house was not very keen to sell when the bids opened in February.

In its "request for proposal" document, Fidelity had stated that it is not keen on making the equity fund management team headed by Alexander Treves, the Mumbai-based CIO, as part of the sale.

The fund house intended to retain the team to manage its offshore investment advisory business, which again is not a part of the "assets-to-be-sold" list.

"We've not been told anything of their investment team till now; we're not really keen to acquire them also. We've our own team to manage funds," said the senior official of a domestic fund house, shortlisted by Fidelity.

Fidelity insiders said the board's meeting in Boston will seal the fate of the deal. If the board is not happy with the bids or conditions placed by the bidders, it may decide to defer the stake sale for a later date, sources said.

Domestic fund houses that have bid for Fidelity's assets have another problem with respect to absorbing their workforce. In its "request for proposal" document, Fidelity expected the acquirer to give jobs to all members of business management team consisting of marketing and sales personnel.

Fund houses such as ICICI, HDFC, Reliance and Birla have full-sized business management teams. These fund houses are still not sure how many Fidelity staffers will they be able to take on their rolls.

Source: http://articles.economictimes.indiatimes.com/2012-03-22/news/31225274_1_fund-business-fidelity-s-india-fidelity-india