The proposed acquisition would help L&T Finance strengthen its foothold in the country's nascent wealth management industry, almost a year after it roped in Manoj Shenoy and 12 executives from Swiss private bank EFG, which shut shop in India last year.
The deal could be finalised in a month, said a person familiar with the matter.
An L&T Finance spokesman said the company did not comment on market speculation, while a Morgan Stanley spokesperson declined to comment.
L&T Finance has taken the acquisition route for growth, making three buyouts last year -- in the MF, housing finance and auto finance segments.
Ved Prakash Chaturvedi, who joined L&T Finance from Tata Mutual Fund last year, is said to be in charge of the company's venture into the wealth management business.
Manoj Shenoy, who reports to him, and executives are said to have brought in $200-250 million in assets of rich investors into L&T Capital, a unit of L&T
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