HSBC's AMC acquires L&T Mutual Fund business for $425 million

L&T Housing Finance on Thursday announced selling L&T Investment Management (LTIM) to HSBC Asset Management (India) at $425 million. LTIM is the investment manager of the mutual fund business of L&T.

The divestment of the 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, it stated in a press release.

The data from the Association of Mutual Funds in India (Amfi) shows L&T Mutual Fund (MF) has average assets under management (AAUM) worth Rs 78,273.80 crore, while HSBC MF has AAUM of Rs 11,314.32 crore as in the July-September quarter.

If the conversion rate of Rs 75 is taken, the deal will be worth approximately Rs 3,188 crore.

Dinanath Dubhashi, managing director and chief executive officer, L&T Finance Holdings, said: “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.”

L&T Investment Management (LTIM) is the 12th largest asset management company (AMC) in India and offers a basket of equity, fixed-income, and hybrid schemes to retail and institutional investors.

This will be a third merger and acquisition in the Indian asset management space in 2021. Earlier in this year, Sundaram AMC had bought the assets of Principal Asset Management. According to the industry participants, the deal was at Rs 338 crore.

In May this year, India’s leading investment platform, Groww, had announced it would acquire Indiabulls Mutual Fund at Rs 175 crores (including cash and cash equivalent of Rs 100 crore).

HSBC intends to merge the operations of LTIM with those of its existing asset management business in India. JP Morgan and Citi were the financial advisors to L&T Finance Housing. Cyril Amarchand Mangaldas acted as the legal advisors and PwC acted as due diligence and tax advisors.