HSBC is buying the mutual fund arm of India’s L&T Finance Holdings for $425 million, the British-based, Asia-focused lender said on Thursday.
Under a strategy spearheaded by group chief executive Noel Quinn, HSBC is ploughing $3.5 billion into its wealth and personal banking business – including asset management – in line with its ambition to become Asia’s top wealth manager by 2025.
HSBC intends to merge L&T Investment Management Limited (LTIM) with its $1.6 billion asset management operation in India, HSBC and L&T said in separate statements.
“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,” Quinn said.
LTIM has assets under management of more than 800 billion rupees ($10.65 billion) and the deal will make HSBC a top-10 asset manager in India, Nuno Matos, HSBC’s head of wealth and personal banking, told Reuters.
Asia is the biggest region for HSBC, and the wealth and personal banking unit contributed 44%, or $22 billion, to the London-headquartered lender’s adjusted global revenue last year.
HSBC said in August it was buying French insurer AXA’s Singapore assets for $575 million and Matos said the lender could make more purchases in the region.
“Most of our growth will be organic … but we continue to look for bespoke acquisitions to improve our capabilities and improve our scale.”
Dinanath Dubhashi, managing director of L&T Finance Holdings, said the HSBC deal was in line with L&T’s aim of “unlocking value” from its subsidiaries, adding this would help it to strengthen its balance sheet for its lending business.
• Reuters with additional editing by George Russell