L&T Finance Holdings dropped 4.24% to Rs 79.10 after the board considered the sale of 100% stake of L&T Investment Management, a wholly owned subsidiary and asset manager of L&T Mutual Fund, to HSBC Asset Management (India).
L&T Finance Holdings (LTFH) and HSBC Asset Management (India) (HSBC AMC) entered into a definitive agreement whereby HSBC AMC acquired 100% equity shares of L&T Investment Management (LTIM), a wholly owned subsidiary of LTFH, which is the investment manager of L&T Mutual Fund, for an aggregate purchase consideration of $425 million (subject to adjustments as set out in the definitive agreements).
The transfer agreement has been executed on Thursday, 23 December 2021. Additionally, LTFH will also be entitled to excess cash in LTIM until the completion of the acquisition. 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.
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. Further, the acquisition of LTIM is in line with the strategic growth plans of HSBC in India. 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, as per the official press statement.
HSBC AMC intends to merge the operations of LTIM with that of its existing asset management business in India, which had assets under management (AUM) of Rs 11,700 crore ($1.60 billion) as of September 2021. J.P. Morgan and Citi were the financial advisors to LTFH. Cyril Amarchand Mangaldas acted as the legal advisors and PwC acted as due diligence and tax advisors to LTFH.
L&T Finance Holdings' consolidated net profit fell 10% to Rs 222.99 crore on a 10.7% decline in net sales to Rs 3,134.46 crore in Q2 FY22 over Q2 FY21.
L&T Finance Holdings is a diversified non-banking financial company (NBFC).
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