Mumbai: Global Financial Major HSBC is buying L & T investment management, managers for L & T mutual funds, around Rs 3,200 Crore (around $ 425 million).
This makes the largest purchase agreement in the Indian fund industry.
It also marks a rare example of foreign financial departments that buy Indian fund managers.
At the end of September, the total assets managed by L & T MF were slightly more than the 80,300 crore RS, while HSBC managed around RS 11,300 Crore, AMFI data showed.
For HSBC, the cost of mixed L & T MF acquisition is around 4% of total assets, felt by industrial players is a good price for acquiring.
In recent years, several majors of global finance have sold their MF business in India to local entities, including the main financial group, JP Morgan, Deutsche Bank, Goldman Sachs, Fidaniy Stanley.
In recent years, the purchase of the US MF Financial Major Relagare in 2018 was the only exception for this dominant trend in the domestic fund industry.
In addition, according to the contour of the latest agreements, HSBC will buy the entire house of funds and not only the AMC scheme and license – trends seen in some recent acquisitions.
Speaking to Toi, HSBC India CEO of Hitendra Dave said that this acquisition underlined the main commitment of British financial services to double the focus to grow their Indian business.
“We will continue to play with our strength and grow our wealth management business in India,” Dave said.
Acquisition, subject to regulatory approval, will be another historical milestone as HSBC gives its strategy to become a leading wealth manager in Asia, release from major British financial services.
“Strengthening the HSBC asset management business in India will add to its ability to serve the wealth needs of its customers in this country and also the basis of non-resident Indian customers throughout the world,” he said.
Recently, HSBC said it got the main arm of Singapore Axa’a Financial France.
Interestingly, exactly a decade ago, L & T MF has bought an Indian fund management business loyalty.
Since then, it has cultivated its asset base organically.
In the past 10 years, several majors of global financial services have sold their local fund houses to Indian entities.
In 2013, HDFC MF had bought the MF Morgan Stanley business in India and SBI MF bought Daiwa MF India’s arm.
Then in 2014, the MF box bought a pinbridge MF, while Aditya Birla MF bought MF in India.
In 2015, the Reliance MF bought the MF India Goldman Sach and Prameriac MF bought Deutsche MF India.
In 2016, Edelweiss MF bought JP Morgan MF’s India Arm, while earlier this year Sundaram MF bought the Principal Financial Group fund management arm.