L&T Finance plans to raise upto Rs 1500 crore through secured Non-Convertible Debentures (NCD), largely to meet its capital requirements and refinancing of loans. The Non Banking Financial Company (NBFC) will raise Rs 500 crore by issuing secured NCDs and will have an option to raise an additional Rs 1,000 crore depending on the oversubscription.
With a face value of Rs 1000 each, the NBFC will offer an annual yield of up to 9.35 per cent on redemption. This issue will open on March 6 and close on March 20 and will be listed on both the stock exchanges-BSE and NSE-after allotment.
Engineering and construction giant Larsen and Tourbo (L&T) is the parent company of L&T Finance and it holds almost 64 per cent stake in the NBFC, which has a market capitalisation of about Rs 24,000 crore.
The firm has a book size of Rs 95,000 crore which includes rural financing, home loans and wholesale financing. The non-lending business comes to a size of Rs 92,000 crore, which includes investment management and wealth management.
It will be for the first time in 10 years L&T Finance is issuing bonds apart from the equity public issue in 2011.
"There are no issues with respect to liquidity as abundant funds are available from banks and mutual funds, but these are wholesale funds and a company should also have retail funds and hence NCDs," managing director and chief executive Dinanath Dubhashi said.
"This NCD issue should be seen as the first step in an overall strategic intent of building a retail liability franchise," he added.
The six series issue (under Tranche 1) will have a tenor ranging from 37 months to 10 years.
Institutional investors and non-institutional investors will be given a 20 per cent allotment each (Category I and II), while high net worth individuals and retail individual investors will be given a 30 per cent allotment each (Category III and IV). The issue does not provide call and put options.
"We believe in the long term play, in which the four sectors that we are in-infra, rural, housing and house hold savings-holds strong growth potential," says Dinanath.
Edelweiss Financial Services Ltd, A K Capital Services Ltd, Axis Capital Ltd and Trust Investment Advisors Pvt Ltd will be the lead managers.
Catalyst Trusteeship Ltd will be the debenture trustee and Link Intime India Pvt Ltd will be the registrar for the issue.