MUMBAI: L&T Finance Holdings, the financial services arm of engineering conglomerate Larsen & Toubro, is in talks with bulge bracket investors such as Bain Capital LLC, Canada Pension Plan Investment Board (CPPIP) and secondary portfolio buyer NewQuest Capital Partners, as it plans to sell off its private equity portfolio to consolidate business segments.
The transaction would mostly be a secondary portfolio selloff, a decision the company had taken in May. L&T Finance has close to Rs 1,000-crore exposure in private equity and structured infrastructure and real estate businesses.
Secondary buyer NewQuest is considered as the preferred buyer, but Bain and CPPIP, which are having an existing exposure with various L&T companies, are also interested candidates, multiple sources briefed on the matter told ET. L&T expects to conclude the transaction in a couple of months, they said.
When contacted, L&T Finance and Bain Capital declined to comment. CPPIP and New Quest did not respond to a mail seeking comments till the time of going to press.
L&T Finance has been looking to prune several of its units, including the asset management and alternative investment business, to concentrate on its hardcore infrastructure and wholesale financing as the company aims to improve the return on equity.
The private equity and proprietary finance businesses do not yield income and paring off these businesses is part of using resources for better businesses, which can provide better yield, Dinanath Dubhashi, L&T Finance Holdings managing director, said in a conference call on May 9.
L&T Finance has been running a proprietary private equity investment arm under L&T Infrastructure Finance since 2006. The firm has been doing structured transactions in infrastructure and real estate sector since then.
With a review of its key portfolio, L&T’s financing business will focus only on three core business segments such as wholesale, rural and housing financing. Both CPPIP and Bain Capital are existing investors at various units of Larsen and ToubroBSE -1.19 %. Last year, Bain picked a 10% stake in L&T Finance for about Rs 1,300 crore while CPPIP had invested Rs 1,000 crore in L&T IDPL, the infrastructure projects development arm of the engineering conglomerate, in December 2014.
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Source: Economic Times
