L&T Finance Holdings announced on Thursday that it will sell its mutual fund business, L&T Investment Management Ltd (LTIM), to HSBC Asset Management (India) Ltd for $425 million.

“The divestiture of the mutual fund business is consistent with L&T Finance Holdings’ strategic goal of unlocking value from its subsidiaries to enhance its balance sheet,” the company said.

In addition, the acquisition of LTIM is in accordance with HSBC’s strategic expansion ambitions in India, according to the business, which will benefit from an experienced workforce, diversified assets, a solid retail customer base, and the broad geographical reach that L&T Mutual Fund has developed over the year.

L&T Finance Holdings’ stock increased 4.08 percent to settle at 82.95 on the NSE on Thursday.

“The HSBC deal is in line with our strategic goal of unlocking value from our subsidiaries, which will help us strengthen our balance sheet for our lending business,” says the company. When combined with the recent capital issue, it gives us the artillery we need to accelerate the pace of retailization in our loan portfolio, which is one of our long-term objectives,” said Dinanath Dubhashi, Managing Director and CEO of L&T Finance Holdings.

L&T Investment Management is India’s 12th largest asset management company (AMC), offering both retail and institutional clients a portfolio of equities, fixed income, and hybrid schemes.

HSBC plans to consolidate LTIM’s activities with its existing asset management division in India, which has assets under management (AUM) of 11,700 crore (US$1.6 billion) as of September 2021, according to an official announcement.

During the acquisition, L&T Finance Holdings received financial advice from JP Morgan and Citi, as well as legal advice from Cyril Amarchand Mangaldas and due diligence and tax advice from PwC.

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