L&T Finance Holdings rise on stake sell buzz

Company might sell 3.5-4% stake to PE investors and raise about Rs 1,000 crore

The shares of L&T Finance Holdings rose 4.61 per cent on Monday compared to previous close on reports that private equity (PE) fund Bain Capital might pick up a stake in the company. The stock closed at Rs 67 a share on the National Stock Exchange on Monday.

L&T currently holds nearly 73 per cent in L&T Finance Holdings. “As a part of its ongoing investor relations exercise, the company meets various investors from time to time. The company would be needing capital from time to time as part of its growth plans over the next few years. It would, therefore, be continuously examining various avenues of capital raising,” said a company spokesperson.

N Sivaraman, president of the company had told Business Standard in an interview last month that the company plans to sell a 3.5-4% stake to PE investors and raise about Rs 1,000 crore as capital to fund growth in the next two years.

Sivaraman had said that the company was looking at annual growth over 20% in the next two years. Part of the capital requirement will be through retained earnings. It has been in talks with PE investors.

The net retained earnings were about Rs 500 crore last year. This gives the ability to grow the assets by Rs 5,000-6,000 crore. Assuming internal capital generation of Rs 1,000 crore, it would need a little over Rs 1,000 crore as external capital to fund growth for 2016-17 and 2017-18.

Bain Capital is one of the world's leading private investment firms with approximately $75 billion in assets under management.

L&T Finance Holdings had reported a 15% rise in net profit at Rs 192 crore during the first quarter ended June 30, 2015.