HSBC Asset Management (India) Pvt Ltd is going to buy the entire stake in the mutual fund business of L&T Finance Holdings (LTFH) for a sum of $425 million or Rs 3,200 crore.
In the announcement, HSBC said “HSBC Asset Management (India) Private Ltd, an indirect wholly-owned subsidiary of HSBC Holdings plc (HSBC), has entered into an agreement with L&T Finance Holdings Limited (LTFH) to fully acquire L&T Investment Management Limited (LTIM) for US$425 million. LTIM is a wholly-owned subsidiary of LTFH and the investment manager of the L&T Mutual Fund”.
The transaction is subject to the approval of the regulatory bodies in India. LTFH said both LTIM and HSBC AMC will ensure that there is continuous availability of services .
According to LTFH, the selling of its mutual funds business is aligned with the strategic aim to unlock the potential value of its subsidiaries to make its balance sheet stronger.
“The transaction with HSBC is in line with our strategic objective of unlocking value from our subsidiaries which will help us to strengthen our balance sheet for our lending business,” Dinanath Dubhashi, managing director & CEO, LTFH said
“When seen alongside the recent capital raise it provides us with enough ammunition to increase the pace of realization in our lending portfolio, which is one of our long-term goals,’’ he said.
Noel Quinn, HSBC’s Group CEO, commented: “This transaction enhances the strength of our business in India and reinforces our status as one of Asia’s leading wealth managers. Combining LTIM with our existing Indian asset management business gives us the scale, reach and capabilities to capture some of the 15-20% annual asset management market growth expected in India over the next five years3. It also boosts our ability to serve India’s growing wealth needs, along with those of the 18 million non-resident Indians around the world. Together with our recent announcement to acquire AXA Singapore, this demonstrates our commitment to capturing the Asia wealth opportunity. We will continue to invest significantly to achieve that goal.”
HSBC is of the view that it will merge its LTIM business with that of its existing asset management division in India.