NEW DELHI: HSBC Asset Management (India), a wholly-owned subsidiary of HSBC Holdings, on Friday said it has entered into an agreement with L&T Finance Holdings Limited (LTFH) to fully acquire L&T Investment Management Limited (LTIM) for $425 million or Rs 3,193 crore.
LTIM is a wholly-owned subsidiary of LTFH and the investment manager of the L&T Mutual Fund. With assets under management of Rs 80,300 crore ($10.8bn) and over 2.4 million active folios as of September 2021, LTIM is currently ranked as the 12th largest mutual fund company in India. It reported a pre-tax profit of Rs 185 crore ($25 million), income of Rs 348 crore ($46.9 million) for the financial year ended March 2021.
The proposed acquisition will strengthen HSBC’s asset management business in India. It is currently a minor player in the industry with assets close to Rs 12,000 crore. Following the completion of the acquisition, which is subject to regulatory approvals, HSBC intends to merge the operations of LTIM with that of its existing asset management business in India.
“This transaction enhances the strength of our business in India and reinforces our status as one of Asia’s leading wealth managers. Combining LTIM with our existing Indian asset management business gives us the scale, reach and capabilities to capture some of the 15-20% annual asset management market growth expected in India over the next five years,” said Noel Quinn, HSBC’s Group CEO.
“Together with our recent announcement to acquire AXA Singapore, this demonstrates our commitment to capturing the Asia wealth opportunity. We will continue to invest significantly to achieve that goal,” he added.
The proposed acquisition will be funded from existing resources and will have a minimal impact on HSBC’s Common Equity Tier 1 ratio. HSBC expects the acquisition to be immediately accretive to the earnings of the Group upon completion and to achieve a return on investment of greater than 10 per cent in the medium term.
In February 2020, HSBC combined its retail banking and wealth management, asset management, insurance and private banking businesses to create Wealth and Personal Banking which serves over 39 million customers globally.
HSBC aspires to be Asia’s leading wealth manager by 2025. Asia generates around half of HSBC’s $1.6 trillion global wealth balances and nearly 65 per cent of the Group’s wealth revenues.