Hinduja Group‘s ambition to acquire a majority stake in Invesco Asset Management (India) is facing roadblocks due to ongoing investigations into IndusInd Bank. This development, reported by Moneycontrol, could be the first big setback for the group amid regulatory scrutiny.
SEBI Reviewing Funding Details
According to Moneycontrol, sources close to the matter say that the Securities and Exchange Board of India (SEBI) may postpone approval for IndusInd International Holdings (IIHL) to acquire 60 per cent of Invesco AMC. This approval is known as sponsor approval and it is essential since IIHL is the sponsor of the mutual fund.
SEBI has reportedly asked IIHL for detailed information on how it plans to fund the acquisition. The regulator is also seeking clarity on whether IIHL will use its own equity or depend on loans to finance the deal, reports Moneycontrol. Additionally, SEBI wants to know if IIHL has arranged any bank funding that involves pledging Invesco’s shares as security.
SEBI is being cautious with Hinduja Group
A senior official familiar with the situation told Moneycontrol that SEBI is cautious to avoid a repeat of the Reliance Capital acquisition, where the Hinduja Group heavily relied on debt and pledged shares of its investment companies to complete the purchase.
The regulator is also closely monitoring the situation at IndusInd Bank. A banker involved in the transaction said that the findings from ongoing investigations at the bank will significantly influence SEBI’s decision on sponsor approval for IIHL, reports Moneycontrol.
Deal Cleared by CCI, On Hold by SEBI
IIHL is the majority promoter shareholder of IndusInd Bank, holding a 12.06 per cent stake, of which 35.5 per cent is pledged as of March 2025. In April last year, IIHL made a bid to acquire 60 per cent of Invesco AMC’s Indian operations, with Invesco retaining 40 percent.
The Competition Commission of India cleared the deal in August 2024, and SEBI gave an in-principle approval shortly after. However, the formal sponsor approval from SEBI is still pending.
Sponsor approval is required for entities that set up mutual funds. According to SEBI guidelines, sponsors must establish the mutual fund trust, incorporate the Asset Management Company (AMC), and fulfill other regulatory steps. This approval usually takes three to six months after in-principle clearance.
In the case of IndusInd Holdings, approval was expected by April 2025 but may now be delayed until SEBI is satisfied about the funding source and completes its review of IndusInd Bank.
An insider familiar with the process told Moneycontrol that further delays are likely as SEBI considers the funding arrangements and the results of forensic audits on IndusInd Bank. Regulatory actions connected to the bank and the AMC could also affect the timing of the approval.