What’s the news?

HSBC Asset Management to acquire an ownership stake in L&T Asset Management for Rs 3,200 Cr.

What does that mean?

HSBC is buying the mutual fund arm of India’s L&T Finance Holdings for Rs 3,200 Cr as it looks to build up its wealth business in Asia. 

L&T Finance Holdings (LTFH) and HSBC Asset Management (HSBC AMC) have entered into a definitive agreement whereby the latter will acquire 100% equity shares of L&T Investment Management.

L&T Mutual Fund (with Assets Under Management of close to Rs 80,000 Crs) is ranked 12 out of 44 in the Indian mutual fund industry.

The divestment of its mutual fund business is in line with the strategic objective of L&T Finance Holdings – unlock value from its subsidiaries to strengthen its balance sheet. The acquisition also bodes well for HSBC who is looking at strategic growth plans in India. 

This is an industry that is not new to acquisitions. 

In July 2010, L&T Financial Services gained access to the mutual fund industry in India after acquiring DBS Chola. Further, L&T Finance Ltd, a subsidiary of L&T Finance Holdings Ltd, had acquired Rs 8,881 Cr AUM of Fidelity in 2012.

Under a strategy spearheaded by Group CEO Noel Quinn, HSBC is ploughing $3.5 billion into its wealth and personal banking business – including asset management – in line with its ambition to become Asia’s top wealth manager by 2025. 

Strengthening HSBC‘s asset management business in India will add to its ability to serve the wealth needs of its customers in India as well as those of its growing NRI customer base across the world.

How does that impact your wealth?

In the past and even currently, L&T funds have been part of a few portfolios and as a Scripbox Investor, you may have some investments in these funds. 

When such ownership change happens at the AMC level, there is little impact to investors since fund management teams and leadership structure continues in place. 

That being said, we are monitoring the matter quite closely and we will recommend actions if there are fundamental changes that impact your investments.