Ravi Menon, CEO, HSBC Asset Management India


New Delhi / MUMBAI: The Indian asset management unit of HSBC Holdings Plc recently announced its intention to acquire the mutual fund business of L&T Finance Holdings Ltd for approximately ??3,191 crores. According to the British lender, the transaction will boost its activity in India, where the mutual fund industry has seen a doubling of assets under management (AUM) to ??37.34 billion as of November 30, 2021 of ??16 50 trillion as of November 30, 2016.

Ravi Menon, CEO of HSBC Asset Management India Pvt Ltd, spoke to Mint about the fund company’s plans and objectives for the India business as well as the program merger after the merger.

Edited excerpts:

How is L&T Mutual Fund suitable for HSBC AMC?

L&T is a perfect match for our location, the type of strengths we have and what they bring. To begin with, they are in the order of approximately ??80,000 crore (assets under management) and we are about ??13,000 crores. Their scale and size are very important. The scale and size derive from a large customer base they have at nearly 2.4 million. Additionally, L&T MF has nearly 29 open plans, of which we have approximately 17 pooled funds. So there are almost 12 new funds that we are going to get.

On the other hand, we have our product capabilities, in terms of international products, and through the fund of funds, which they don’t have. So, we bring that to the table. Overall, HSBC is very, very focused on ESG.

In terms of fund managers, how would you decide who would continue to manage which fund?

The way we see it, as the other attractive part of the deal. It is the talent that we acquire. And if you look at the absolute number of people, on both sides, they’re not very big teams. And I think that’s the whole point of this business. With the plans we have, there will be significant opportunities for all of our colleagues on both sides. How you decide in terms of management and co-management, I think it will all be done in discussions, which will take place over time.

What are your plans and goals for the merged entity?

We all operate with business plans. So that’s only part of the story. The question is, what is our strategy? And what does this transaction help us achieve in terms of the big picture, but also the fairly immediate story, and that goes from our group strategy to what we define as our strategy in Asia where we aspire to leadership position. In India, in particular, that means we want to be in the short term, a top 10 player, and in the medium term, a top 5 player.

Historically, your programs haven’t somehow outperformed the performance charts. Many L&T investors may be apprehensive about how performance will become after the acquisition is completed. How to reassure these investors?

What works well will continue without any change. The performance of the fund depends on the period considered. For example, the HSBC Large Cap Fund since its inception has been one of the best performing funds in the country. Our equity funds are mostly in quartile one or quartile two since the start of the year, according to Morningstar. We offer a prudent and well-researched process for investors who want to invest for the long term. Our multi-asset portfolios, a unique offering of dynamic asset allocation portfolios, are rated four stars by Morningstar, as are three of our fixed income funds.

We can assure our investors and distributors that there will be no change in our high performing pool funds and that every effort will be made to improve the others.

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