BackL&T Finance to open ₹3,000 crore rights issue on 1 February
The lender has fixed a price of ₹65 per equity share for the offer and an entitlement ratio at 17:74, as on the record dateDuring the October-December period, the company posted highest quarterly disbursements since Q1 FY20, up by 51% QoQ
PremiumMumbai: Non-bank lender L&T Finance Holdings (LTFH) on Monday said its board has approved raising of up to ₹3,000 crore through a rights issue.
A rights issue is a fundraising tool to mobilize capital from existing shareholders of a company. Shares are generally offered at a discount to prevailing market price in a rights issue.
The offer will open on 1 February and close on 15 February, the company said.
The lender has fixed a price of ₹65 per equity share for the offer and an entitlement ratio at 17:74 (17 equity shares for every 74 shares held by the Eligible Equity Shareholders of the company), as on the record date.
Banks and non-banking financial companies (NBFCs) have been raising funds to build capital buffers such as Mahindra Finance and Shriram Transport Finance have raised ₹3,089 crore and ₹1,500 crore through their respective rights issues.
Last week, L&T Finance Holdings Ltd. (LTFH), reported a 51% decline in consolidated net profit at ₹291 crore for the third quarter ended December 31, 2020, against ₹591 crore in the corresponding period last year.
During the October-December period, the company posted highest quarterly disbursements since Q1 FY20, up by 51% QoQ. Farm Equipment disbursements rose by 43% QoQ at ₹1,554 crore in Q3 FY21 over ₹1,089 crore in Q2 FY21. Two-wheeler disbursements were up 50% at ₹1,652 crore compared to ₹1,102 crore in September quarter of the current fiscal.
Recently, a working committee set up by the Reserve Bank of India released new proposals to review the ownership and corporate structure of private sector banks. The committee also suggested the conversion of large NBFCs into banks.
Brokerages see the proposal as favourable to large NBFCs promoted by corporate houses like L&T Finance along with the likes of Bajaj Finance, Mahindra Finance, Aditya Birla Capital and others who may now look forward to converting to a universal bank.
Shares of L&T Finance fell 5.33% to close at ₹99.50 on Monday on BSE, while the benchmark index, Sensex lost 0.96% to close at 48564.27 points.
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