HSBC AMC acquires L&T Finance's mutual fund business for $425 mn

L&T Finance Holdings announced on Thursday that it is divesting its mutual fund business to HSBC Asset Management Private Limited (HSBC AMC) for $425 million.

"L&T Finance and HSBC AMC have entered into a definitive agreement according to which HSBC AMC will acquire 100% equity shares of L&T Investment Management Limited (LTIM)  a wholly-owned subsidiary of LTFH, which is the investment manager of L&T Mutual Fund," the company said in a statement.

In addition, LTFH will also be entitled to excess cash in LTIM until the completion of the acquisition. 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 statement added.

LTFH has stated that the divestment of MF 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 further added that 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," it said.

Dinanath Dubhashi, Managing Director & CEO, L&T Finance Holdings Ltd. commented: "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 further 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."

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.