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L&T Finance (L&TFH) falls on plan to sell unit to HSBC India

By Anoop Agrawal

05:42, 24 December 2021

HSBC building in Canary Wharf financial centre. Headquarters of one of the largest financial services and banking organisation in the world
HSBC buys India L&T’s mutual fund arm – Photo: Shutterstock

Shares of India’s L&T Finance Holdings (L&TFH) fell on Friday after the non-banking financial company said in an exchange filing on Thursday that it agreed to sell 100% equity shares of its wholly-owned mutual funds arm L&T Investment Management to its rival HSBC Asset Management (India) for $425m.

Shares of L&T Finance Holdings fell 6.5% to INR77.2 on the National Stock Exchange before noon.

L&T Finance Holdings will be entitled to excess cash in L&T Investment Management (LTIM) until the completion of the acquisition, which is subject to regulatory approvals, according to the filing.

The sale of the mutual fund business was in line with the strategic objective of L&T Finance Holdings of unlocking value from its subsidiaries to strengthen its balance sheet, the release noted.

Unlocking value from subsidiaries

According to HSBC AMC, the proposed buyout was in line with its strategic growth plans in India.


16,039.90 Price
+0.480% 1D Chg, %
Long position overnight fee -0.0262%
Short position overnight fee 0.0040%
Overnight fee time 22:00 (UTC)
Spread 1.8


38,034.25 Price
+2.570% 1D Chg, %
Long position overnight fee -0.0616%
Short position overnight fee 0.0137%
Overnight fee time 22:00 (UTC)
Spread 106.00


0.62 Price
+1.980% 1D Chg, %
Long position overnight fee -0.0753%
Short position overnight fee 0.0069%
Overnight fee time 22:00 (UTC)
Spread 0.01168


2,048.53 Price
+1.690% 1D Chg, %
Long position overnight fee -0.0192%
Short position overnight fee 0.0110%
Overnight fee time 22:00 (UTC)
Spread 0.50

LTIM’s mutual fund manages assets worth INR803bn and has over 2.4 million active customer accounts. It is the 12th largest asset management company in India as of September 2021. The HSBC asset management company manages assets worth INR117bn.

Dinanath Dubhashi, managing director and chief executive officer of L&T Finance Holdings said: “When seen alongside the recent capital raise it provides us with enough ammunition to increase the pace of retailisation in our lending portfolio, which is one of our long-term goals.”

“Over the past 10 years, L&T Mutual Fund has garnered the trust of stakeholders across the spectrum, backed by steady and stable performance. The journey from an AUM of a few thousand crores to over INR800bn this year speaks of the strength of the L&T brand,” he added.

Upon securing required approval, HSBC intends to merge the operations of LTIM with that of its existing asset management business in India.

Read more: HDFC sees financial, auto, metal stocks underperforming

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The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
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