Engineering major l&T and its financial services arm l&T Finance Holdings on Monday divested 10.22 per cent stake to leading American private equity firm Bain Capital for over Rs1,300 crore in a mix of preferential allotment and market deals.
While l&T Finance divested 5.27 per cent of its stake to Bain Capital through preferential shares and warrants for Rs707.9 crore, the parent l&T sold 4.95 per cent of its stake in the NBFC to the PE fund through a block deal, raising around Rs602 crore.
According to NSE block deal data, l&T sold over 8.5 crore shares or 4.95 per cent at an average price of Rs70 a share for Rs602 crore, while l&T Finance sold over 9.5 crore shares or 5.27 per cent for Rs707.9 crore.
The exchange data did not name the buyer, but sources said the stocks were picked by Bain Capital. Citigroup acted as the custodian for the deal.
l&T Finance board today decided to raise capital (Rs707.87 crore) by way of preferential issue of eligible securities and warrants to Bain Capital Investments VI and Bain Capital Asia Growth Investments (collectively Bain Capital) respectively, subject to approval from shareholders and relevant statutory/ regulatory authorities, the company said in a statement.
Before today's block deal, l&T held 1,25,49,36,010 number of shares aggregating to 72.93 per cent of equity capital in the NBFC as of the June quarter. Today the parent divested 4.95 per cent to Bain Capital through a block deal.
Bain Capital is a Boston, US-based PE fund, and had n March it had announced that it would invest $3 billion in Indian assets. As of March 2015 its exposure in the domestic companies reportedly stood at $1.3 billion.
l&T Finance would issue an aggregate of 9,56,57,961 equity shares and warrants at Rs74 per share/ warrant, amounting to an infusion of Rs707.87 crore, constituting 5.27 per cent of the post-issue equity share capital on a fully diluted basis.
Under the agreement, Bain Captial will be issued 3,18,36,971 equity shares at a price of Rs74 per share, amounting to an aggregate of Rs235.59 crore or 1.75 per cent of the post-issue equity share capital on a fully diluted basis to BC Investments VI, while 6,38,20,990 warrants at a price of Rs74 per warrant or 3.51 per cent, amounting to Rs472.27 crore BC Asia Growth Investments.
Warrants may be exercised by Bain Capital within a period of 18 months from the allotment date or accelerated after six months from the date of allotment based on the company's capital requirement, l&T Finance said.
The company said it will seek shareholders' approval for the deal through a postal ballot. In the quarter to June, l&T Finance reported a 15 per cent increase in the net profit at Rs192 crore, owing to steady growth in its wholesale loan book.
The share of retail finance and wholesale business in net profit was Rs89 crore each. Its wholesale loanbook rose 29 per cent to Rs23,352 crore from a year ago while its retail loan book was at Rs25,867 crore, up 14 per cent.
Gross non-performing assets rose to Rs1,278 crore in the first quarter from Rs1,045 crore reported in the March quarter, while gross NPAs as a percentage of the loan book rose to 2.64 per cent,up from 2.25 per cent in March.
Recently, l&T Finance chairman Y M Deosthalee had told PTI that sensing an agrarian crisis following a drought-like conditions in many part of the country, the company has already curtailed its lending to rural customers and that he expects more asset troubles coming in from rural markets.
Recently, the company had also said it expected the NPA levels to rise in the next few quarters since it has started reporting bad loans within 150 days of a payment default, compared with 180 days earlier.
The l&T Finance Holdings counter on Monday closed down 2.55 per cent at Rs66.85 on the BSE, against the benchmark that shed 26 points against Friday's closing.