Bain invests $199m in India's L&T Finance
Bain Capital has acquired a 10.3% stake in L&T Finance Holdings, the financial services unit of Indian engineering conglomerate Larsen & Toubro (L&T), for approximately INR13.04 billion ($199 million).
The private equity firm has subscribed to up to 31.8 million equity shares at INR74 apiece and up to 63.8 million warrants at the same price, according to a regulatory filing. This equates to a 5.26% stake on a fully diluted basis. Bain also bought 85.2 million shares at INR70 apiece from L&T via a block trade, taking its holding to around 10.3%.
The warrants may be exercised within 18 months of the allotment date, but this could be shortened to six months, based on L&T Finance's capital requirements.
Both transactions were completed at a modest premium to the company's Friday closing price of INR68.6. Shareholder approval has yet to be given.
L&T Finance is a non-banking financial company (NBFC) that provides a range of financial products and services spanning retail, corporate, housing and infrastructure, as well as mutual fund products and investment management services. It claims to have more than 2.5 million customers across 24 states.
The company reported total consolidated revenue of INR63.3 billion for the 2015 financial year, up from INR52.3 billion the previous year. Net profit dropped to INR5.97 billion from INR8.51 billion. As of June 2015, L&T Finance's wholesale loan book was worth INR233.5 billion while its retail loan book was at INR258.7 billion.
Other significant transactions in the NBFC space this year include TPG Capital's full exit from Shriram City Union Finance (SCUF). The PE firm sold a 20.37% stake to Apax Partners for INR23 billion, having previously made several partial exits in 2013.
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