HSBC AMC To Buy L&T Investment Management For Rs 3,200 Crore
HSBC Asset Management India Ltd. has agreed to buy L&T Investment Management Ltd., a wholly owned subsidiary of L&T Finance Holdings Ltd., for approximately Rs 3,193 crore.
The acquisition is subject to regulatory approval, after which HSBC, with assets under management of Rs 11,700 crore, plans to merge the target company with its existing business in India.
L&T Investment Management has assets under management of Rs 80,300 crore and over 24 lakh active folios as of September 2021 and is the twelfth-largest mutual fund management company in India, HSBC said in a statement.
The acquisition will be funded from existing resources and will have a "minimal" impact on HSBC’s Common Equity Tier 1 ratio of around 5 basis points, it said. Upon completion, HSBC expects the acquisition to be immediately accretive to the group's earnings and achieve a return on investment of over 10% in the medium term.
“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,” Noel Quinn, HSBC’s group chief executive officer, was quoted as saying in the statement.
L&T Investments' Financials
LTIM reported a pre-tax profit of Rs 185 crore, income of Rs 348 crore and costs of Rs 163 crore for the year ended March.
“LTIM’s customer base and wide footprint in India will provide HSBC with much deeper access to a high-growth wealth management market,” Surendra Rosha, HSBC’s co-chief executive for Asia Pacific, said. “India’s rising income levels and higher life expectancy are driving an expanding and yet under-penetrated sector.”
In August, HSBC announced it would buy AXA Singapore, the eighth-largest life insurer in Singapore by annualised new premiums. “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,” Quinn said.