SCBFF Standard Chartered Plc (PK)

Morgan Stanley (MS) announced its decision to divest its private wealth management unit in India to Standard Chartered PLC (SCBFF). The sale is expected to be completed by the end of 2013. However, the terms of the deal have not been disclosed.

The deal comes as part of Morgan Stanley’s plans to increase focus on the other areas of business in India that include core institutional securities, investment banking and asset management. Standard Chartered is expected to initially pay $8 million for the India unit, which would be followed by an amount that has not been disclosed.

The wealth management division in India was set up by Morgan Stanley in 2008. The unit offered investment advisory services in equity, fixed income and private equity. The unit currently has approximately $800 million of assets under management. Further, in 2012, the India unit accounted for approximately 5% of its revenues.

Morgan Stanley’s decision to sell its wealth management unit in India comes in view of the highly competitive Indian market, which is posing a challenge for the company. Additionally, higher staff expenses and frail markets battered the company’s revenue. Moreover, the stringent landscape restricted the growth opportunities by putting a limit to its product offerings. All these factors prompted Morgan Stanley to surrender its banking license in India earlier in 2013 and sell off its wealth management unit to Standard Chartered later on.

Morgan Stanley had earlier divested many of its business units located worldwide. In Mar 2013, Morgan Stanley initiated the sale of its European wealth-management business to Credit Suisse Group AG (CS). The deal comprised assets worth $13 million and is expected to be completed by the end of 2013.

Earlier in Feb, 2013, Morgan Stanley divested a section of its global stock plan services (GSPS) business, which provides employee stock plan record-keeping and automated trade execution services to some of the top companies in the United Kingdom and Europe, to Computershare Limited. The business is based in Europe, Middle East and Asia (EMEA) region. The deal is likely to be concluded in the second quarter of 2013.

Morgan Stanley’s strategy to dispose unprofitable and non-core business units might prove beneficial for the company in the near term.

Morgan Stanley currently carries a Zacks Rank #3 (Hold). In the same sector, Ladenburg Thalmann Financial Services Inc. (LTS) is a better performing stock with a Zacks Rank #1 (Strong Buy).

 
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