Exclusive | L&T Finance shortlists 6 bankers for Rs 3,000-crore rights issue, launch likely in January 

L&T Finance Holdings, the NBFC arm of diversified conglomerate Larsen and Toubro, has shortlisted six merchant bankers for its Rs 3,000 crore-rights issue and to fortify its balance sheet, sources have told Moneycontrol. 

“Citi, UBS, HSBC, Credit Suisse, Motilal Oswal and Axis Capital have been shortlisted as of now for the rights issue. The firm wants to shore up its capital. Additional banks may be taken on board at a later stage,” one of the sources said.

 The Rs 3,000-crore rights issue would likely be launched in January 2021, a second source told Moneycontrol. Both the sources spoke on the condition of anonymity. 

When contacted, L&T Finance declined to comment. So did HSBC, UBS, Axis Capital, Credit Suisse and Citi. Motilal Oswal couldn’t be contacted immediately for a response. 

The firm’s board had approved the rights issue on November 9, 2020.

"The board approved the offer and issuance of fully paid-up equity shares of the company for an amount not exceeding Rs 3,000 crore by way of a rights issue to the eligible equity shareholders of the company,” L&T Finance had said in a regulatory filing.

The details of the issue, including price and entitlement ratio, would be determined in due course, it said. Its share price has risen 31 percent in the last three months.

Expanding club 

Non-banking finance companies (NBFCs) like M&M Finance and Shriram Transport Finance have raised Rs 3,089 crore and Rs 1,500 crore, respectively, via rights issues 

Heavyweights like ICICI Bank, HDFC Ltd and Axis Bank have together raised nearly Rs 40,000 crore via the qualified institutional placement (QIP) route.

Recently, a working committee set up by the Reserve Bank of India released path-breaking proposals to review the ownership and corporate structure of private sector banks. It committee also suggested the conversion of large NBFCs into banks. 

Brokerages see the proposal as favourable to large NBFCs promoted by corporate houses like L&T Finance along with the likes of Bajaj Finance, Mahindra Finance, Aditya Birla Capital and others who may now look forward to converting to a universal bank.

 Moneycontrol was the first to report on January 31, 2020, that as part of the conglomerate’s non-core asset monetisation drive, L&T Finance had revived plans to sell its mutual fund business and appointed JP Morgan to advise on the transaction. 

A subsequent report on April 30 had named private equity giant Blackstone and three other entities as potential suitors for the transaction.