L&T Finance, the wholly-owned financial services subsidiary of engineering and construction major Larsen & Toubro, announced on Thursday that it is buying out DBS Cholamandalam Asset Management Co for Rs45 crore.
The loss-making DBS Cholamandalam was set up as a joint venture between Singapore's DBS Bank and Chennai-based Murugappa Group. The 100-per cent buyout values DBS Chola at 1.55 per cent of its total assets under management, which stood at Rs2,893 crore on 31 August.
Equirus Capital was advisor to L&T Finance for the deal, while Edelweiss Capital advised DBS Chola. Industry officials said the valuation is one of the lowest among the deals in the domestic mutual fund industry in the recent years.
L&T Finance recently raised $200 million through a retail bond sale. It said at a press conference in Mumbai that the buy would help the company ''widen and deepen'' its services.
L&T Financial Services has Rs9,000 crore worth of assets under its subsidiaries L&T Finance and L&T Infrastructure Finance. This acquisition would synergise with L&T's existing financial services business, and enable it to deepen and widen its services, the company said.
DBS Cholamandalam on its part said in a statement to the Bombay Stock Exchange, "Considering its own longer term vision for its core businesses, DBS Cholamandalam Finance has decided to exit the asset management business."
L&T Finance had earlier this month expressed its desire to enter the 'asset management company' or in lay terms, the mutual fund business, saying it is open to acquisitions to become an asset management company. (See: L&T Finance may buy stake in mutual fund business)
Reports suggested that it was in the process of negotiating with DBS Chola for the purpose.