Page 17 - Banking Finance October 2020

MUTUAL FUND

Mutual Fund News

Blackstone looks to and Exchange Board of India's (Sebi) For the L&T Mutual fund deal, Sebi's
permission to buy a majority stake in approval was crucial for Blackstone to
buyout L&T Mutual Fund, L&T Mutual fund but since the matter acquire the entire business. As per the

expand India financial ser- had regulatory complications it took extant norms, any entity with 40% or
vices play almost six months for the capital mar- more stake is classified as a sponsor in
ket regulator to give its green signal an AMC and such a sponsor needs to
Private equity giant Blackstone is in for the proposal, he said. comply with the eligibility criteria
advanced talks with engineering behe- Blackstone has been aggressively pur- stipulated by Sebi. The regulatory re-
moth Larsen and Toubro Ltd.'s financial suing opportunities in India's BFSI space strictions prevent any PE player from
subsidiary L&T Finance to completely as a part of its larger strategy to gain acquiring more than 39.99% in an
buyout the mutual fund business of L&T from the growth prospects of lending AMC business.
Asset Management Company, This, as businesses and investment culture "Blackstone is currently a PE firm but
the New York-based PE firm is aggres- among India's large but under pen- has a track record of managing public
sively looking to enhance its India play, etrated population. investments in its previous avatar. Also,
especially in the financial services Blackstone manages Real Estate In-
space, said two people with direct Blackstone has invested over $15 bil- vestment Trust (REIT), which is related
knowledge of the matter, on the con- lion in India till date, across private to market volatility and public money.
equity ($6.9 billion), real estate ($7.8
dition of anonymity.
billion) and tactical opportunities ($400 So, Sebi should allow Blackstone to be
The deal, if it goes through, will mark million). a 100% owner of an AMC," said a per-
the first buyout of an Indian AMC by a son close to Blackstone.
Blackstone lost out to PAG in the race
foreign non-mutual fund company. to buy Edelweiss' wealth management
L&T AMC, with 39 MF schemes, has Almost 60% of Mutual
assets worth around Rs. 63,057.2 business in early September but the PE
firm is holding steady on its strategy to Fund Assets Will Be ESG by
crore as of the September quarter.
strengthen its foothold in India's finan-
"Sebi expressed its comfort with the cial services space. In 2019-20, 2025, PwC Says
proposal only in the second week of Blackstone private equity invested $2.5 ESG investing is the most significant
September. Blackstone had started the billion in India, while executing India's development in money management
discussion in March. If the valuation is largest buyout in financial services - since the creation of the exchange-
agreed upon by both L&T and Aadhar Housing Finance for around traded fund two decades ago and it
Blackstone, the deal should get closed $470 million. will reshape finance just as passive
before 15 November," said the first If the L&T AMC deal fructifies, it will funds have.
person.
add mutual fund business to That's the finding of a new report from
Blackstone had sought the Securities Blackstone's India buyout portfolio. PwC that forecasts as much as 57% of

BANKING FINANCE | OCTOBER | 2020 | 17