A probable delay in acquiring a majority stake in Invesco Asset Management (India) Private Limited may be the first fall out for the Hinduja group due to the ongoing investigations into the affairs of IndusInd Bank.
According to highly placed sources aware of the matter, capital market regulator Sebi may delay granting approval to IndusInd International Holdings Limited (IIHL) to acquire 60 percent stake in Invesco AMC. In industry parlance, this is referred as sponsor approval, IIHL being the sponsor in this case.
Multiple people with knowledge of the development say Sebi has sought details of how IIHL will fund the transaction. Further, it has asked the Hinduja group’s flagship holding company in financial services whether it will deploy its own equity or rely on borrowings to raise equity for Invesco buyout.
It has also asked IIHL whether it has entered into funding arrangements with banks whereby it has agreed to pledge Invesco’s shares as part of the funding structure.
“Sebi is keen that Invesco deal doesn’t end up like the Reliance Capital acquisition where the Hinduja’s extensively relied on debt and pledged shares of its investment companies to honour the transaction,” said a senior official aware of the matter.
Sebi is also said to be assessing the overall situation at IndusInd Bank. “The outcome of investigations at the bank will play a very crucial role in Sebi’s sponsor approval for IIHL,” said a banker involved in the deal, who didn’t want to be identified.
Emails sent to Sebi and Hinduja group remained unanswered till publishing the article.
To put things in context, IIHL is the majority promoter shareholder at IndusInd Bank. It holds a 12.06 percent stake in the bank. 35.5 percent of its holdings has been pledged as per the shareholding pattern for March 2025.
In April last year, IndusInd Holdings made a bid to acquire a 60 percent stake in Invesco AMC’s Indian arm, with Invesco continuing to hold 40 percent stake in the business. Competition Commission of India (CCI) cleared the deal on August 20, 2024 while Sebi is said to have given an in-principal approval on August 30, 2024, according to news reports.
What is pending from Sebi is sponsor approval for IndusInd Holdings.
Role of sponsor in AMCs
Sponsor refers to any person acting individually or in concert with another body corporate, to establish a mutual fund. According to Sebi guidelines, the sponsor is responsible for all the steps for setting up and registering a mutual fund with Sebi, such as establishing Mutual Fund trust under the Indian Trust Act 1961, incorporating and setting up Asset Management Company (AMC) and trustee company as per the conditions of SEBI in-principle approval.
Sponsor approval usually takes about 3-6 months from the date of in-principle approval. In IndusInd Holding’s case, it was anticipated that the approvals would come through by April this year.
“There could be more delays till Sebi is satisfied about the source of funding for the Invesco deal. Outcome of forensic audit and possible regulatory action may also be weighed in by Sebi as IndusInd Holdings is the common shareholder for the bank and the AMC,” said person involved in the matter but didn’t want to be named.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!