Ashok Leyland buys 3.62% stake in NBFC unit for Rs 202 crore, ups stake to over 65%

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Published: March 26, 2020 1:50:47 AM

Consequent to the aforesaid acquisition, the company’s shareholding in HLFL stands increased from 61.83% to 65.45%.

Of the 7% holding, 2.11% has already been acquired by other investors, the company said in a filing earlier.Of the 7% holding, 2.11% has already been acquired by other investors, the company said in a filing earlier.

Hinduja group flagship Ashok Leyland (ALL) on Wednesday said it has acquired 3.62% stake in its NBFC subsidiary Hinduja Leyland Finance (HLFL) for a consideration of little over Rs 202 crore, thereby increasing its holding in the latter to 65.45%. The move is part of its earlier decision to acquire 7% holding in its NBFC subsidiary.

In a communication to the stock exchanges, Ashok Leyland said that in continuation to its letters dated March 18, 2020 and March 21, 2020, they inform that the company has acquired 1,70,17,995 shares of Rs 10 each, constituting 3.62% of the paid-up equity share capital of HLFL, at a price of Rs 119 a share.

Consequent to the aforesaid acquisition, the company’s shareholding in HLFL stands increased from 61.83% to 65.45%. The aforesaid acquisition is part of the 6.99% acquisition approved by the board at the meeting held on March 21, 2020.

The Hinduja group flagship in February this year had informed that it, along with other investors, had decided to acquire part of PE investor Everfin Holdings’ stake in HLFL for a consideration of Rs 390.49 crore. Everfin, an investment arm of PE major Everstone, holds close to 7% stake in HLFL. Of the 7% holding, 2.11% has already been acquired by other investors, the company said in a filing earlier. The latest decision to acquire 3.62% is aimed at consolidating its stronghold in its vehicle financing subsidiary, said sources here.

It may be recalled that on March 18, Ashok Leyland suddenly announced that it will overall buy 19% stake in HLFL, including 7% stake of Everstone’s arm (and 12% from other promoter-owned entities) for a consideration of around Rs 1,200 crore to increase its holding sharply in HLFL. The sudden decision led to a sharp fall in its stock prices next day. The company had to scale down its decision following strong objections from shareholders, particularly the minority ones, who raised questions on the company’s move to suddenly increase its stake buy-out in HLFL. During the conference call on March 19, investors raised questions on the timing, valuations and the rationale of the deal. The day after the March 18 announcement, the stock price crashed more than 26% to hit one-year lows.

The move also surprised analysts who were tracking the company at a time when the company has been maintaining tight self-discipline on capital allocation practiced since FY14.

Hinduja Leyland Finance was incorporated on November 12, 2008. It is one of India’s leading vehicle finance NBFCs with a focus on urban and semi-urban markets. Through a vast network of branches, it finances a wide range of commercial and personal vehicles, which include medium- and heavy-commercial vehicles (MHCVs), light commercial vehicles (LCVs), small commercial vehicles (SCVs), cars, multi-utility vehicles, three-wheelers and two-wheelers, as well as various kinds of used vehicles. It also finances tractors and construction equipment, and provides loans against property (LAP).

For the year ended March 31, 2019, HLFL had reported a profit of Rs 275.64 crore on a revenue of Rs 2,560.64 crore.

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