In another consolidation in the mutual fund segment, L&T Finance Holdings offered to sell its mutual fund business, L&T Investment Management Ltd (LTIM), to HSBC Asset Management (India) Ltd for $ 425 million ( approximately Rs 3,200 crore). LTIM will eventually be merged with HSBC’s asset management business in India.
The two companies have entered into a definitive agreement under which HSBC AMC will acquire 100% of the shares of L&T Investment Management Ltd, a wholly owned subsidiary of L&T Finance Holdings (LTFH), which is the investment manager of L&T Mutual Fund.
L&T MF has assets under management of Rs 80,000 crore. HSBC intends to merge LTIM’s operations with those of its existing asset management business in India, which had assets under management (AUM) of Rs 11,700 crore as of September 2021.
LTFH will also be entitled to excess cash in LTIM until the completion of the acquisition. “The transaction is subject to the required regulatory approvals. LTIM and HSBC AMC will work to ensure continuity of services to their investors and counterparties in the interim, ”LTFH said in a statement.
The divestiture of the mutual fund business is in line with L&T Finance Holdings’ strategic objective of unlocking value from its subsidiaries to strengthen its balance sheet, he said.
Dinanath Dubhashi, Managing Director and CEO of L&T Finance Holdings, said: “The transaction with HSBC is in line with our strategic objective of unlocking value from our subsidiaries, which will help us strengthen our balance sheet for our lending business…”