HSBC Asset Management (India) Private Ltd., an indirect wholly-owned subsidiary of HSBC Holdings Plc., said it has entered into an agreement with L&T Finance Holdings Ltd. (LTFH) to fully acquire L&T Investment Management Ltd. (LTIM) for $425 million.
LTIM is the investment manager of L&T Mutual Fund.
Following the completion of the acquisition, and subject to regulatory approvals, HSBC would merge the operations of LTIM with 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,” Noel Quinn, HSBC’s Group CEO, said
“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 . It also boosts our ability to serve India’s growing wealth needs, along with those of the 18 million non-resident Indians around the world,” he said.
The proposed acquisition will be funded from existing resources and will have a minimal (5bps) impact on HSBC’s Common Equity Tier 1 ratio, the entity said.
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% in the medium term.