After mopping up around Rs 500 crore through an issue of non-convertible debentures (NCDs) in February this year, L&T Finance is planning a couple of more issues to raise at least another Rs 1,000 crore. The non-banking financial company (NBFC) hopes to raise the money at around 8.5% for a tenure of three years.
Simultaneously, L&T Finance, which lends money for the purchase of commercial vehicles, tractors and construction equipment, is also mulling a public issue or a placement of private equity investment in the later half of 2010. Said N Sivaraman, senior vice-president, Larsen & Toubro (financial services), ?There will be some form of value unlocking but we?re not sure of the form.?
L&T Finance expects its disbursements to grow by about 30% in the current year over Rs 7,000 crore lent in 2009-10. The NCDs floated in February carried a coupon rate of 8.5% per annum for a maturity of three years. That was 200 basis points higher than the three year term deposit offered by the State Bank of India. ?Our issues offer a coupon rate that is 200 basis points higher than the fixed deposits of the banks. It helps gain investors? confidence and we?ll continue with this practice,? said Sivaraman. The fully-owned subsidiary of engineering major Larsen & Toubro, feels that placing NCDs with retail buyers is a good way to establish the brand. According to Sivaraman, ?It will help build a brand among retail investors for our new ventures, namely, the mutual fund and general insurance.?
L&T had entered the asset management business by buying a 100% stake in Cholamandalam DBS Finance in September 2009 for a consideration of Rs 45 crore, adjusted for cash balance and current assets. The fund?s assets under management stands at Rs 5,171 crore. Meanwhile, L&T is awaiting clearance for its general insurance business, where again, the focus will be on retail investors.
