Kotak to help L&T Fin sell Rs 3,800-crore portfolio

Mumbai: L&T Finance Holdings, the financial service arm of engineering conglomerate Larsen & Toubro, has appointed Kotak Investment Bank to sell its defocused portfolio including car financing, construction equipment, SME term loans, said two people in the know of the development.

These businesses are worth Rs 3,800 crore. “The business that we are selling is the non-core or defocussed portfolio which includes cars, leases, LCV, construction equipment SME term loans and LCV,“ said a L&T Finance spokesperson.

“The private equity and prop equity book is around Rs 800 crore which is part of the wholesale book, which also we are planning to sell... this is on top of Rs 3,800 crore.“ The company has been selling some of its businesses and focussing on key portfolios. This April, the company unveiled its strategy to reach top quartile return on equity by FY20 through a combination of right businesses, right structures and right people. "The process may get delayed because of the focus on demonetisation," said an executive of Kotak Investment Bank.

L&T Finance has been focusing on profitable growth and has increased disbursement in its focused portfolio businesses like microfinance and housing finance. In the second quarter its wholesale finance saw strong growth in IDF and syndicated assets.

L&T Finance is looking to focus on three segments; rural, wholesale and housing. It plans to raise return on equity to high teens by 2020. Return on assets for the second quarter of FY17 was at 11.72 per cent. It has been running down its de-focused products with no additional disbursements this financial year. The company has been evaluating alternatives to maximise value through sell-down. Earlier this year, the company announced plans to merge L&T Finance, Family Credit and L&T FinCorp.