Banking News

L&T Finance Holdings news: L&T consolidates financial services into a single entity


L&T Finance Holdings Ltd. (LTFH), the non banking finance company (NBFC) of engibeering to IT conglomerate Larsen & Toubro Ltd (L&T) has merged all its financial services companies within itself, creating a single lending entity, effective December 4.

The merger will consolidate lending companies L&T Finance Ltd, L&T Infra Credit Ltd. and asset manager L&T Mutual Fund Trustee Ltd into LTFH. All sharehlolder and regulatory approvals are in place, the company said. The merger will improve operational efficiencies, help in complying with Reserve Bank of India (RBI) regulations, enhance governance and controls and help in better liquidity management, LTFH said in a release.

CEO Dinanath Dubhashi said the merger is a completion of a process which started seven years and has seen the reduction of the number of NBFCs from eight to a single entity.

“The decision to merge two lending entities with the same NBFC – investment & credit company registrations and one non-operating entity with LTFH was taken after carefully considering market dynamics, internal synergies, and a vision for sustained growth. With the merger, we believe we will be able to unlock newer avenues for growth, innovation, and long-term success. All these benefits would lead to superior governance that would create sustainable value for all stakeholders,” Dubhashi said.

A single entity will simplify corporate structure and eliminate duplication of various processes at multiple subsidiaries.

It will also bring in treasury and operational efficiency in costs incurred for managing liquidity at multiple entities (subsidiaries) vis–a–vis that of one entity.The consolidation into a single entity will also help avoid two listed financial services companies as both L&T Finance and LTFH were classified as upper layer NBFCs requiring compulsory listing under the RBI’s scale based regulations within three years. “The merger avoids creation of two equity listed entities while ensuring seamless compliance with the RBI scale based regulations with respect to listing,” LTFH said.LTFH will now become an operating lending entity from a holding company generating direct profits from the lending businesses which will increase its ability to provide enhanced returns to its shareholders.

A single entity structure will also facilitate operational efficiencies in terms of better utilisation of management bandwidth, consolidation of systems & controls and reduction in administrative cost. LTFH will now become the equity listed operating lending entity.


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