Banking News

L&T Finance to sell Rs 4,762 crore of distressed assets

L&T Finance is selling ₹4,762 crore of its distressed-asset loan book to three asset reconstruction companies by the end of this quarter to help clean up its books, said people with knowledge of the proposed move. Kotak Mahindra Bank-backed Phoenix ARC is set to acquire most of the 15 bid-out accounts, followed by CFM ARC and Prudent ARC, said the people cited above.

L&T Finance, a subsidiary of listed L&T Finance Holding, had invited offers from ARCs for a portfolio of ₹5,293 crore comprising 16 accounts. It invited offers from ARCs in a combination of security receipts (SR) and cash payment wherein 15% will be paid as upfront cash and the balance 85% as security receipts. It had set a reserve price of ₹2,080 crore.

However, none of the ARCs offered to buy the exposure to Delhi-NCR realtor Supertech, one of the 16 accounts in the portfolio with outstanding loans of ₹531 crore. As a result, L&T Finance sold 15 accounts with outstanding loans of ₹4,762 crore.

L&T Finance and Phoenix ARC did not respond to ET’s request for comments. Other ARCs could not immediately be reached for their comments.

The non-banking finance company is likely to close the deal before the end of this month, people said.

The L&T Finance stock, which is flat in comparison with where it was five years ago, has climbed 40% so far in 2023 as the company has sought to clean up its balance sheet, exiting assets that have turned sour. The list of troubled exposures in the L&T portfolio includes Avantha Holdings with outstanding debt of ₹1,116 crore, Bhoruka Power with ₹1,876 crore, IREO (₹433 crore) and Supertech (₹531 crore).The other accounts include Bhoruka Power Investments, Coast Town Planners, CSA Properties, Hanjer Biotech Mira, JCSA Enterprises, Mabsoot Buildhomes India, ND Telecom Services, Perpendicular Construction, RPS Infrastructure, Sagar Power Dendela, Shapoorji Pallonji Development Managers and Smartstone Property Developers.

L&T Finance has been regularly selling distressed asset portfolios to ARCs. The finance company sold a portfolio of ₹1,800 crore to Phoenix ARC in the last week of June this year comprising six real estate accounts, as reported by ET on July 4. The portfolio was sold for ₹1,075 crore under a 15:85 structure. In March, it sold a ₹880 crore distressed portfolio comprising five real estate loans given to Pune-based Xrbia group.

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