HSBC Asset Management to acquire 100% of L&T Mutual Fund for $ 425 million

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L&T Finance Holdings will sell its mutual fund business L&T Investment Management Ltd to HSBC Asset Management (India) Ltd for $ 425 million (around RS 3,200 crore), the company said in a stock exchange document on Thursday.

“L&T Finance Holdings (LTFH) and HSBC Asset Management today entered into a definitive agreement under which HSBC AMC acquires 100% of the shares of L&T Investment Management Ltd, a wholly-owned subsidiary of LTFH …”, stated the company.

LTFH, the investment manager of L&T Mutual Fund, will also be entitled to excess liquidity in L&T Investment Management until the acquisition is completed. The transaction is subject to the required regulatory approvals, he added.

“The transaction with HSBC is in line with our strategic objective of unlocking value from our subsidiaries, which will help us strengthen our balance sheet for our lending business. Taken alongside the recent capital increase, it provides us with enough ammunition to accelerate the pace of retailing our loan portfolio, which is one of our long-term goals, ”said Dinanath Dubhashi, Director general and CEO of L&T Finance Holdings.

In addition, the acquisition of L&T Investment Management is in line with HSBC’s strategic growth plans in India. HSBC stands to gain from an experienced team, diversified assets, a strong retail customer base and the broad geographic reach that L&T Mutual Fund has built over the years, the statement added.

L&T Investment Management and HSBC AMC will work to ensure continuity of services to their investors and counterparties in the interim.

JP Morgan and Citi were financial advisers to L&T Finance Holdings. Cyril Amarchand Mangaldas acted as legal advisers and PwC acted as due diligence and tax advisers to L&T Finance Holdings.

With assets under management (AUM) of Rs 80,300 crore ($ 10.8 billion) and over 2.4 million active folios as of September 2021, L&T Investment Management is the 12th largest asset management company ( AMC) in India. It offers a basket of equities, fixed income securities and hybrid programs to retail and institutional investors.

Meanwhile, HSBC intends to merge LTIM’s operations with those of its existing asset management business in India, which had assets under management of Rs 11,700 crore ($ 1.6 billion) in September 2021.

In February 2020, HSBC combined its retail and wealth management, asset management, insurance and private banking businesses to create the private and wealth banking that serves more than 39 million customers in the world.

Until last year, reports suggested that global private equity giant Blackstone and IIFL Wealth, which is backed by private equity firm General Atlantic, were also in the process of acquiring a controlling stake in the funds. mutual funds of the engineering conglomerate Larsen & Toubro Ltd.

L&T entered the mutual fund industry ten years ago by acquiring DBS Chola MF. It expanded the vertical in 2016 when it acquired the India mutual fund business of Fidelity. The company had average assets under management of Rs 71,000 crore as of December 31, 2019.


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