IFC leads $550m investment in India's L&T Finance

BNP Paribas, Citibank, and DBS Bank also contributed to the first tranche, with IFC committing $125 million of the $275 million total. IFC’s contribution consists of a senior secured loan with a five-year tenor, according to a disclosure. The investment is intended for L&T Finance, a non-banking finance company (NBFC) operated by LTFH.

L&T Finance targets India’s agricultural community, providing financing solutions for smallholder farmers including loans for farm equipment and two-wheelers as well as micro-loans for women entrepreneurs. The new investment will be used to expand the company’s farm equipment loans.

India’s economy remains heavily dependent on farming, with more than 58% of the population reporting agriculture as their primary source of livelihood in 2018. However, the market is highly fragmented and dominated by smallholder farmers who lack the resources to invest in expanding or modernizing their farms, keeping their output low.

Rural finance comprised 26% of LTFH’s loan book as of March 2019, with total lending value of INR256 billion ($3.7 billion) according to the company’s annual report. LTFH also manages wholesale finance and housing finance services, in addition to investment management and wealth management. Revenue for the year ended March 2019 came to INR5.3 billion, up from INR4.8 billion the year before; over the same period net profit was steady at INR2.7 billion.

In addition to L&T Finance, IFC has backed several of LTFH’s other subsidiaries, including L&T Housing Finance and L&T Infrastructure Finance. LTFH is also backed by Bain Capital, which invested INR13 billion in the company in 2015.

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• Topics
• South Asia
• Financials
• Expansion
• India
• IFC
• Agriculture
• NBFCs
• Financial Services