India’s L&T Finance Weighs $450 Million Rights Issue
L&T Finance plans to run down its structured finance and debt capital businesses over the next two years, says CEO Dinanath Dubhashi. (Photographer: Adam Ferguson/Bloomberg News)

India’s L&T Finance Weighs $450 Million Rights Issue

L&T Finance Holdings Ltd. is exploring a plan to raise around $450 million through a rights issue, people familiar with the matter said.

The financial services arm of Larsen & Toubro Ltd. has started discussing the fundraising with potential advisers, said the people, who asked not to be identified as the matter is private. L&T Finance’s parent, India’s largest engineering and construction company, has agreed it would buy any unsold shares in the offering, the people said.

No final decision has been made regarding the amount to be raised or the share sale’s timing, and the company can still decide not to proceed with the fundraising plan, the people said. Representatives for Larsen & Toubro and L&T Finance declined to comment.

L&T Finance is joining financial peers from ICICI Bank Ltd. to Housing Development Finance Corp. in seeking to raise funds to boost its capital buffer, as the nation’s coronavirus-battered economy is set to go into its first annual contraction in at least four decades.

Lenders are already grappling with bad debt that was high even before the pandemic. Indian banks’ gross bad loan ratio could rise to 12.5% by March 2021, the highest in over two decades, from 8.5% a year earlier, the Reserve Bank of India predicted in a report last month.

Incorporated in 1994, L&T Financial offers financial products including mortgage and farm equipment loans as well as services like asset management, according to its LinkedIn profile. The financier had extended loans of 989 billion rupees as of the end of June, exchange filings show.

©2020 Bloomberg L.P.

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