L&T Finance Holdings, the publicly-held financial services company, is introducing various measures to bolster its housing finance subsidiary. Early this year, L&T had forayed into this segment, acquiring Indo-Pacific Housing Finance, which has a book size of about Rs 250 crore. L&T Finance Holdings now plans to increase the book size to about Rs 5,000 crore over the next few years by broad-basing the target segment. Earlier, the company had focused on the low-income segment.
The housing finance subsidiary would be a new, standalone entity, directly under L&T Finance Holdings.
L&T Finance Holdings offers a diverse range of financial products and services across the corporate, retail and infrastructure finance sectors. It also offers mutual fund products and investment management services, through its direct and indirect wholly-owned subsidiaries—L&T Finance Limited, L&T Infrastructure Finance, L&T Investment Management Ltd (L&T Mutual Fund) and L&T FinCorp. As on June 30, the company’s book size stood at about Rs 26,000 crore.
N Sivaraman, president and whole-time director of L&T Finance Holdings told Business Standard the company had acquired Indo-Pacific Housing, as it had a clean book, with negligible NPAs. “What we intend to do is broad-base the target segment and go after the salaried class in the urban segment, and the self-employed in rural areas,” Sivaraman said.
With the acquisition of Indo-Pacific Housing, L&T Finance Holdings had taken the first step beyond the asset finance orientation territory, into the consumer finance domain. “We chose the route of acquiring a small, operating business for our entry into this market because it brought with it a fully functional operating platform. It is also registered with the National Housing Board and has a well experienced team of mortgage experts. Add to that our already existing national reach—an all-India capacity of sales, credit and service—and you have ideal conditions for quick growth,” Sivaraman added. He said eventually, Indo-Pacific Housing Finance would be rebranded and the division would effectively leverage L&T’s vast network across India.
It is understood L&T Finance Holdings is in discussions with Hong-Kong-based private equity fund AIF Capital for possible equity infusion, something both the companies denied. Investment bankers indicated there was a possibility of AIF infusing about Rs 120 crore into the housing finance subsidiary.
Sivaraman denied any such move, saying the company intended to infuse equity on its own, as and when required. “The net worth of the housing finance arm is Rs 100 crore and the book size is Rs 250 crore. We can leverage six to seven times and after that, we will think about infusion,” he told Business Standard.