HSBC to acquire L&T mutual funds for $425 mn

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HSBC will be acquiring L&T Mutual Fund for $425 million (about Rs 3,192 crore) in a bid to grow its franchise in the country, which it considers as a growth market.

HSBC already has an asset management arm in the country, which is less than a sixth in size of L&T MF. L&T Finance Holdings is selling to unlock value and strengthen the balance sheet, which will offer support to its core lending business, its managing director and chief executive Dinanath Dubhashi said.

The deal, which had been making for months, will see HSBC emerge as the 12th largest fund house in the country with an asset under management of a little less than Rs 1 lakh crore, and growing the business organically to that scale would have been difficult, HSBC India’s chief executive Hitendra Dave said.

“We are impatient for growth. We think India is a great story and this acquisition must be seen as a strong statement of how deeply we trust India. No country offers as much growth opportunities,” Dave told PTI over a call. He said L&T MF has good production, distribution, research and investment teams, which coupled with the trust of HSBC will be of help in servicing existing investors and also tapping into new ones.

The acquisition, which will have to pass regulatory musters, will help the wealth management strategy for HSBC that feels Asian individuals’ wealth will grow the fastest in the way forward, Dave said.

L&T Finance Holdings (LTFH) entered into a definitive agreement on Thursday with HSBC Asset Management India (HSBC AMC) to sell 100 per cent equity shares of L&T Investment Management (LTIM), the investment manager of L&T Mutual Fund, for an aggregate purchase consideration of $425 million, an official statement said.

LTFH will also be entitled to excess cash in LTIM until the completion of the acquisition, it said, adding that both LTIM and HSBC AMC will work to ensure that there will be continuity of services to their investors and counterparties in the interim.

HSBC intends to merge the operations of LTIM with that of its existing asset management business in India, which had an AUM of Rs 11,700 crore as of September 2021.

Dave said eventually there will be only one brand. The acquisition also stands out because it comes at a time when many global institutions have fully or partly exited from financial services businesses in the country, he added.

He, however, stressed that the lender looks at India differently and pointed to strengths like foreign investors being welcome here, the strong growth, government policies and the prospect of people getting wealthier. The L&T Finance Holdings scrip closed 3.57 per cent up at Rs 82.60 apiece on the BSE on Thursday, as against a gain of 0.68 per cent on the benchmark.

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Published on: Friday, December 24, 2021, 09:14 AM IST

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