HSBC has agreed to buy the Indian mutual funds business of L&T Finance for $425m as part of efforts to build its wealth management business in Asia.
HSBC plans to merge the mutual funds business with its existing asset-management operations in India, which had $1.6bn assets under management as of end-September.
The UK based lender has also been looking to grow its Asian wealth management and insurance operations through acquisitions in Asia. In August, HSBC agreed to acquire insurer Singapore-based life insurance unit of France’s AXA.
The acquisitions demonstrate “our commitment to capturing the Asia wealth opportunity,” HSBC chief executive Noel Quinn said. “We will continue to invest significantly to achieve that goal,” Quinn said.
HSBC will fund the acquisition from its internal resources and it will have a minimal impact on the bank’s common equity tier-1 ratio, it 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,” said Dinanath Dubhashi, chief executive of L&T Finance.
The acquisition when completed is expected to be immediately accretive to HSBC’s earnings and can achieve a return on investment of greater than 10% in the medium term, the bank said.
JP Morgan and Citigroup advised L&T Finance on the deal.
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This article was published by Dow Jones Newswires