Foreign lender HSBC on Thursday announced that its asset management arm will acquire L&T Mutual Fund for USD 425 million (about Rs 3,192 crore).

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L&T Finance Holdings (LTFH) and HSBC Asset Management (HSBC AMC) have entered into a definitive agreement whereby the latter will acquire 100 per cent equity shares of L&T Investment Management, according to a statement.

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L&T Investment Management (LTIM), a wholly-owned subsidiary of LTFH, is the investment manager of L&T Mutual Fund.

L&T Finance Holdings will also be entitled to excess cash in LTIM until the completion of the acquisition, it said, adding that the transaction is subject to the requisite regulatory approvals.

"This acquisition underscores our commitment to double down on our focus to grow our materially large franchise in India,? HSBC India's Chief Executive Officer Hitendra Dave said.

Dinanath Dubhashi, MD and CEO of L&T Finance Holdings, said the deal is in line with the strategic objective of unlocking value from subsidiaries to strengthen our balance sheet for the lending business.