Bain Capital Partners has picked up a 10.22% stake in L&T Finance Holdings, the financial services firm promoted by Larsen & Toubro, in two separate deals for Rs 1,300 crore, the company said in a statement on Monday.
Following this, Bain Capital will have one seat on the board of the holding company and some of the major subsidiaries.
YM Deosthalee, chairman and managing director, L&T Finance Holdings, told analysts that not only has Bain Capital chosen them for its first BFSI investment in India, the transaction is also at a premium to the market price and structured so that the company has the funds on hand when it needs them over the next 18-month period.
“It positions L&T Finance to invest in the eventual economic recovery without being distracted by capital raising concerns since we will now not need any more capital till March 2017,” he added.
The company said its board has approved a preferential allotment of equity shares and warrants to BC Investments VI and BC Asia Growth Investments (collectively referred to as Bain Capital) respectively, subject to approval from shareholders and regulatory authorities.
“Subject to all necessary approvals, it is proposed to issue 9.56 crore equity shares and warrants at Rs 74 per piece, amounting to an infusion of Rs 707.8 crore into the company and constituting around 5.27% of the post issue equity share capital,” it said in a statement, adding that the 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.
In another transaction, its parent Larsen & Toubro has sold 8.52 crore equity shares of L&T Finance Holdings or 4.95% of existing equity share capital on National Stock Exchange on Monday at Rs 70 per share amounting to Rs 596 crore.
The L&T Finance Holdings scrip closed at Rs 66.85 on the BSE, down 2.55% from its previous close.