L&T Finance Holdings Ltd. (LTFH), on Monday announced the successful completion of the merger of its subsidiaries, viz., L&T Finance Ltd., L&T Infra Credit Ltd. and L&T Mutual Fund Trustee Ltd. with itself, in a press note.
After completing the requisite process of shareholders’, creditors’ and regulatory or statutory approvals, the merger becomes effective from Monday, 4.12.2023.
One of the leading Non-Banking Financial Companies (NBFCs) in India, L&T Finance Holding aims to create a simplified ‘Single Lending Entity’ to provide a range of financial products and services under the L&T Finance brand.
With this merger, all the lending businesses of L&T will be housed under one single entity i.e., LTFH, with it becoming the equity listed operating lending entity.
The respective Boards of the said companies had approved the proposed merger in January 2023 and the process was completed post requisite approvals from shareholders, creditors, and regulatory or statutory authorities such as the Reserve Bank of India (RBI), National Company Law Tribunal (NCLT), Securities and Exchange Board of India (SEBI), and Stock Exchanges.
Calling the merger a ‘key strategic initiative’, Dinanath Dubhashi, Managing Director & CEO of LTFH, said “It gives me immense pleasure to announce that the merger has been completed before the envisaged time with all the necessary approvals in place. This merger is amongst the key strategic initiatives undertaken by us in line with the ‘Right Structure’ strategy that our Company has been implementing over the last seven years; with the number of NBFCs reducing from 8 to 1.”
Expressing that the merger is important for a sustained growth of the company, he added, “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.”
Believing that the long term growth will be poised for a sustainable growth, innovation and success, L&T Finance Holdings mentioned in the note that they want to “enhance governance and controls” and a single entity structure would help in simplifying the corporate structure.
And a single entity would also bring in treasury and operational efficiency bringing down the cost of managing the subsidiaries eventually helping in the liability management of the organisation.
After the merger, LTFH would become an operating lending unit from a holding company, i.e., a core investment company, as mentioned in the press note by the organisation. This would help in generating direct profits from the lending business, gradually increasing enhanced returns to its shareholders.
The move of merging all the subsidiaries together is also essential from the stance of RBI Scale Based Regulations. LTF was categorised as NBFC – Upper Layer under the extant RBI regulations, which mandates listing on the stock exchanges within three years from the date of such categorisation. This would have led to two entities – LTF and LTFH being equity listed within L&T Finance. The unification prevents the creation of two equity listed units while ensuring seamless compliance with the RBI Scale Based Regulations w.r.t. listing on the stock exchanges of the country.
In future, L&T Finance Holdings is focused on creating a top-class, digitally-enabled, retail finance company as part of the Lakshya 2026 plan. The goal is to move the emphasis from product focus to customer focus and establish a robust Retail portfolio with quality assets, thus creating a Fintech@Scale while keeping Environmental, Social, and Governance (ESG) at the core.
