The banking group's spinoff of the business is part of a long-planned drive to remove some balance sheet exposure.

Standard Chartered has agreed to spin off its private equity business and sell most of its private equity investment portfolio to funds managed by ICG Strategic Equity, part of Intermediate Capital Group Plc. The financial terms of the transaction were not disclosed.

The bank said it is expected that the spin out of the private equity business and the sale of the majority of SCPE's investment portfolio will incur a restructuring charge of around $160 million.

The UK-listed bank, which earns the bulk of its revenues in regions such as Asia, said that the deal “underpins an MBO by Affirma Capital”. That entity is an independent private equity firm owned and operated by members of the management team of Standard Chartered Private Equity, who will manage the portfolio and investment activities in future.

The portfolio is made up of private equity investments in 35 companies across Southeast Asia, India, China, South Korea, the Middle East and Africa. Affirma Capital will manage the group portfolio acquired by the ICG Strategic Equity funds, and the portfolio owned by third-party investors in SCPE's existing funds. 

The transaction is expected to complete in the first half of 2019.

The lender, which has been pushing to improve profitability and remove some risks, said that in 2016 it planned to reduce its balance sheet exposure to principal finance.

"The SCPE team has streamlined the Group's private equity business over the past few years, in line with our stated objectives. This transaction will see the group exit the majority of its private equity exposure, and gives the SCPE team an opportunity to pursue an independent future with the backing of ICG Strategic Equity,” Simon Cooper, CEO, corporate, commercial and institutional banking at the group, said.