HSBC Asset Management India has signed a deal to buy L&T Investment Management (LTIM) from L&T Finance for $425m.
LTIM is a wholly-owned subsidiary of L&T Finance and the investment manager of the L&T Mutual Fund.
Said to be one of the largest mutual fund companies in the country, the unit manages over $10.8bn in assets and has more than 2.4m active folios.
Its distribution platform is said to comprise some of the leading banks, regional distributors, and over 50,000 independent financial advisers.
LTIM, which has a presence across 65 locations across India, also manages digital platforms.
The deal is part of the British lender’s strategy to build out its wealth and asset management presence in Asia.
It is expected to help HSBC strengthen its asset management in India in order to serve its Indian customers as well as its increasing non-resident Indian customer base globally.
Following the close of the deal, HSBC plan to integrate the operations of LTIM into its current asset management business in India.
Commenting on the deal, HSBC Group CEO Noel Quinn 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.”
HSBC co-chief executive Asia Pacific Surendra Rosha noted that LTIM’s customer base and wide footprint in India will offer the bank deeper access to a high-growth wealth management market.
The bank expects the latest acquisition to be immediately accretive to the earnings of the group and to achieve a return on investment of higher than 10% in the medium term.
Recent Asia moves by HSBC
HSBC has been strengthening its focus on Asian wealth management space where it aims to be a top player by 2025.
Asia is said to deliver around half of the bank’s $1.6 trillion global wealth balances and approximately 65% of its wealth revenues.
In February this year, the bank identified Greater China, Southeast Asia, and India as key drivers of its future growth as part of a new strategy.
Recently, HSBC agreed to purchase AXA Singapore to expand its insurance and wealth franchise in Singapore with a focus on driving its Asian wealth management business.