L&T Finance to buy Fidelity Mutual Funds India business: Sources

MUMBAI: L&T Mutual Fund has acquired the India assets of Fidelity Mutual Fund. The fund house out-gunned other asset management companies like HDFC Mutual Fund, Birla Sunlife Mutual Fund and Pramerica Mutual to clinch the deal. The deal is said to be valued at over 6.5%. The deal will help L&T Mutual Fund to scale up its assets from Rs 4616 crore to Rs 13, 313 crore.

Fidelity Worldwide Investment had picked five potential buyers for its India mutual fund assets. Reliance Mutual Fund, HDFC Mutual, Pramerica and Birla Sunlife figured among names that have made to the final list, two sources close to the deal said.

Among the bidders, Pramerica Mutual is learnt to have valued Fidelity Mutual Fund’s assets at about Rs 600 crore, which works out to 6.9% of Fidelity’s Rs 8,700 crore asset base. HDFC Mutual and Reliance Mutual Fund have placed bids in the range of Rs 550 crore and Rs 580 crore, sources said.

“Post the Budget, there are worries whether the acquiring fund house will be able to use past losses (made by the selling company) to their advantage. If the fund house is sold to a local player, it will cut across quite a lot of legal and tax complications,” said the chief executive of one of the shortlisted fund houses on conditions of anonymity.

Fidelity Worldwide will have to pay tax on capital gains if it manages to strike a profitable deal following changes in tax laws introduced in the Union Budget. The government has signalled its intention to tax capital gains that may arise out of crossborder M&A transactions pertaining to Indian assets.