L&T Finance sheds 4% on sale of mutual fund business to HSBC

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L&T Finance sheds 4% on sale of mutual fund business to HSBC

Shares of L&T Finance Holdings lost 4 per cent in early trade on Friday after foreign lender HSBC said its asset management arm will be acquiring L&T Mutual Fund from L&T Finance Holding for $425 million (about Rs 3,192 crore) in a bid to grow its franchise in the country.

L&T Finance Holdings’ share price dropped to a low of Rs 79.25 as against the previous close of Rs 82.60 on the National Stock Exchange.

“The divestment of mutual fund business is in line with the strategic objective of L&T Finance Holdings of unlocking value from its subsidiaries to strengthen its balance sheet,” the domestic company said in a release to bourses on Thursday.Stock Analysis – Know before investingStock score of L moved down by 1 in 3 months on a 10-point scale.Subscribe NowExclusively for

The acquisition of LTIM (L&T Investment Management Ltd) is in line with the strategic growth plans of HSBC in India, the company said in the exchange filing, adding that HSBC stands to gain from an experienced team, diversified assets, strong retail customer base and the vast geographical reach that L&T Mutual Fund has built over the years.

The transaction is subject to the requisite regulatory approvals. Both LTIM and HSBC AMC will work to ensure that there will be continuity of services to their investors and counter-parties in the interim, reports said.

“The transaction with HSBC is in line with our strategic objective of unlocking value from our subsidiaries which will help us to 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 realisation in our lending portfolio, which is one of our long-term goals,” L&T Investment Management’s Managing Director and Chief Executive Officer Dinanath Dubashi was quoted as saying in reports.

At present, LTIM is the 12th largest asset management company in India.

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