L&T Finance announced the acquisition of Fidelitys mutual fund business in India for an undisclosed amount. With the acquisition L&T Mutual fund became the 13th largest mutual fund in the country with total assets under management of Rs 13,497 crore.
L&T Finance did not disclose the amount paid for the acquisition but sources close to the development said that L&T Finance will pay around Rs 550 crore for the acquisition of Fidelitys mutual fund business that had AUM of Rs 8,881 crore as on December 2011.
According to another source close to the development L&T was not the highest bidder but was chosen on considerations of retaining the employees and for similar bottom up stock picking approach.
Under the agreement that was signed on Tuesday,along with the AUM,L&T will take over the debt management team,sales and marketing team. Fidelity will however retain its equity management team and that will be available with L&T till the integration is complete.
L&T said that as per the deal it will not take the accumulated losses of Fidelity amounting to over Rs 300 crore.
We are not taking any of those losses, said YM Deosthalee,CEO,L&T Finance Holdings. It is for the earlier entity to look at how to deal with that.
L&T Finance that entered the asset management business in 2010 by acquiring DBS Cholamandalam AMC and aims to get into top five over the next few years said that this acquisition comes as a right fit.
We were looking for inorganic opportunities to get into some kind of leadership position and this was good fit for us. While our portfolio is predominantly debt they have more of retail equity assets,secondly they have high quality team and thirdly while L&Ts asset management business is largely dependent upon IFAs they have other channels for distribution which is complementary, said Deosthalee.