HSBC AMC acquires L&T Finance's mutual fund unit for Rs 3,200 cr

The divestment of mutual fund business is in line with the strategic objective of L&T Finance Holdings of unlocking value from its subsidiaries to strengthen its balance sheet, says the company

L&T Finance Holdings Limited (LTFH) and HSBC Asset Management (India) Private Limited on Thursday entered into a definitive agreement whereby HSBC AMC shall acquire L&T Investment Management Limited, a wholly-owned subsidiary of LTFH, which is the investment manager of L&T Mutual Fund, for $425 million (approximately Rs 3,200 crore).

The transaction is subject to the requisite regulatory approvals. Both LTIM and HSBC AMC will work to ensure that there will be continuity of services to their investors and counter-parties in the interim. 

"The divestment of mutual fund business is in line with the strategic objective of L&T Finance Holdings

of unlocking value from its subsidiaries to strengthen its balance sheet. Further, the acquisition of LTIM is in line with the strategic growth plans of HSBC in India. HSBC stands to gain from an experienced team, diversified assets, strong retail customer base and the vast geographical reach that L&T Mutual Fund has built over the years," said L&T Finance Holdings in a stock exchange filing.

Dinanath Dubhashi, Managing Director & CEO, L&T Finance Holdings Ltd. said: “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. When seen alongside the recent capital raise it provides us with enough ammunition to increase the pace of retailisation in our lending portfolio, which is one of our long-term goals”

He added: “Over the past 10 years, L&T Mutual Fund has garnered the trust of stakeholders across the spectrum, backed by steady and stable performance. The journey from an AUM of a few thousand crores to over Rs. 80,000 Cr this year speaks of the strength of the L&T Brand.”

LTIM is today the 12th largest Asset Management Company (AMC) in India and offers a basket of equity, fixed income and hybrid schemes to both retail and institutional investors.

HSBC intends to merge the operations of LTIM with that of its existing asset management business in India, which had assets under management (AUM) of Rs 11,700 crore ($1.6bn) as of September 2021. JPMorgan and Citi were the financial advisors to LTFH. Cyril Amarchand Mangaldas acted as the legal advisors and PwC acted as due diligence and tax advisors to LTFH.

"This acquisition underscores our commitment to double down on our focus to grow our materially large franchise in India," said HSBC India's Chief Executive Officer Hitendra Dave.