- HSBC to emerge as the 12th largest fund house in India once it acquires L&T mutual fund for 3,192 crores, approximately.
- HSBC is looking for growth and they trust India and consider it to be a growth market.
- This acquisition is happening at a time when many global institutions have fully or partly exited from the financial service business.
“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,” HSBC India’s chief executive Hitendra Dave told PTI over a call.
Foreign lender HSBC which already has an asset management arm in India has entered into a definitive agreement with L&T Finance Holdings (LTFH) to acquire 100% equity shares of L&T Investment Management (LTIM) for an aggregate consideration of USD 425mn (about 3192 crores). LTIM is a wholly-owned subsidiary of LTFH and is the investment manager of L&T Mutual Fund.
HSBC is less than a sixth in size of L&T MF and has been trying to get this deal for several months. Hitendra Dave said that this will make HSBC 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.
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 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.
“This acquisition underscores our commitment to double down on our focus to grow our materially large franchise in India,” Dave added.
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.
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.
Source: PTI
