L&T Finance to sell mutual fund business to HSBC

L&T Finance Holdings has agreed to sell its mutual fund business to HSBC’s Indian arm for $425 million (£316.81m).

The deal, subject to regulatory approval, is expected to strengthen the balance sheet of the Indian non-banking financial company.

It said HSBC AMC will acquire 100 per cent equity shares of L&T Investment Management Limited, which is the investment manager of L&T Mutual Fund.

HSBC intends to merge the operations of LTIM with its existing asset management business in India, which had assets under management of Rs 117 billion (£1.16 bn) as of September 2021.

LTIM, a wholly-owned subsidiary of L&T Finance, is the 12th largest asset management company in India and offers a basket of equity, fixed income and hybrid schemes to both retail and institutional investors.

L&T Finance, which is part of the diversified Larsen & Toubro Ltd, said in a statement that the deal is in line with the strategic growth plans of the London-headquartered HSBC in India.

“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. 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,” the Indian company’s managing director and CEO Dinanath Dubhashi said on Thursday (23).

LT Finance stock reacted to the announcement on Friday (24), falling 6.9 per cent to Rs 76.9 (76p) at close on the Bombay Stock Exchange.