News Update

Bain Capital Acquires $200 Million Stake in India’s L&T Finance – Bloomberg

Bain Capital Partners will spend about $200 million to buy a stake in Indian engineering firm Larsen & Toubro Ltd.’s financial arm, as Prime Minister Narendra Modi’s infrastructure plans offer the possibility of more lending opportunities. 

The U.S. private-equity firm will own about 10 percent of L&T Finance Holdings Ltd., after buying new stock and warrants as well as purchasing some existing shares from Larsen in a block trade, L&T Finance President N. Sivaraman said by phone Monday. The two separate transactions could be valued at a total of about $200 million, Sivaraman said.

L&T Finance will use the proceeds from the sale of new shares and warrants to meet its capital adequacy requirements, according to Sivaraman. The non-bank financial company offers home mortgages as well as vehicle and equipment loans, mutual funds and investment management services.

The company expects its loan book to increase at a compound annual growth rate of 20 percent to 25 percent over the next three years, he said. The company could benefit from the Indian government’s plans to build 13,000 kilometers (8,080 miles) of new roads and 160,000 watts of solar and wind power capacity by 2022, Centrum Broking Ltd. wrote in a Sept. 15 note.

“All our capital requirements till March 2017 have now been taken care of,” Sivaraman said.

In one part of the deal, Bain Capital will spend 7.08 billion rupees ($108 million) for a 5.27 percent stake in L&T Finance by purchasing a mix of preferential shares and warrants at 74 rupees apiece, the non-bank lender said in a statement Monday. Bain Capital will pay 2.35 billion rupees for 31.83 million shares, with the rest to be in the form of warrants that can be exercised over the next 18 months. 

Larsen separately sold about 5 percent of L&T Finance at about 70 rupees per share, people familiar with the matter said Monday. The majority of the holding was acquired by Bain Capital, the people said, asking not to be identified as details are private. Citigroup Inc. was the sole arranger of the deal, according to the people.

Shares of L&T Finance fell 3.2 percent to 66.60 rupees at 1:43 p.m. in Mumbai.

Before the transaction, Larsen owned 72.9 percent stake of the finance unit, according to exchange filings. Its stake will be eventually diluted to 62.5 percent after all the warrants have been exercised, Sivaraman said. 

Amit Chandra, a managing director at Bain Capital in Mumbai, didn’t respond to an e-mail and phone call seeking comment. Sivaraman didn’t elaborate on details of the block trade, while Larsen spokesman Debojyoti Chatterjee declined to comment beyond the company’s filings.

Bain Capital Acquires $200 Million Stake in India’s L&T Finance – Bloomberg}

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