Blackstone frontrunner for Rs 3,200 crore L&T Mutual Fund buy

Blackstone is closing in on the acquisition of L&T Mutual Fund, but the deal closure would hinge upon approval from the capital markets regulator, which generally frowns upon private equity ownership of mutual funds. Both sides are currently in “exclusivity” to continue bilateral negotiations that are believed to be primarily focussed on valuations, said a person with knowledge of the development.

Blackstone, which lost out to PAG in the race to buy Edelweiss’ wealth management business  has offered to pay not more than Rs 3,200 crore, or around 5% of L&T Mutual Fund’s total assets under management. L&T Finance, which owns the mutual fund business is believed to be expecting around Rs 4,000 crore.

The move is part of L&T Finance’s drive to monetise non-core businesses. An L&T MF spokesperson declined comment and Blackstone did not respond to an email requesting comment. Market experts believe Securities and Exchange Board of India’s (Sebi) approval might prove to be a problem. “Limited life funds are not allowed to own mutual fund AMCs in India by the market regulator,” said Sandeep Parekh, managing partner, Finsec Law Advisors.

Concerns over Stable Capital “Hence it is not easy for private equity funds to acquire any such businesses,” he said. Most private equity funds are raised for a limited period (not more than seven to nine years) and hence they cannot provide stable capital, according to the regulator.