Jul 23, 2011

IPO: L & T Finance Holdings IPO to raise Rs 1,245 crore.

L&T Finance IPO to raise Rs 1,245 crore:  L&T Finance Holdings, a subsidiary of engineering conglomerate L&T, plans to mobilize 1,245 crore through an initial share sale, marking it as one of the few large issues this year in a volatile market.

The company which has fixed a price band of 51-59 per share for its offer which will open for subscription on July 27 and close on July 29. It will open for anchor investors a day earlier, on July 26. The company is aiming for a 17% stake dilution. The issue will list by August 10-12, a banker said.

"This is the first public issue from the house of L&T since the parent's listing way back in 1950," L&T Group chief financial officer, YM Deosthalee said in Mumbai on Thursday. The gross issue size is of 1,575 crore, but the net issue size for the public will be only 1,075 crore, as the company has already raised 330 crore through pre-IPO placement to US-based private equity fund Capital International. The company issued six crore equity shares at 55 per share to Capital International, amounting to a 4% stake in the company.

The company is going to raise 161 crore via anchor investors in the IPO. Two FIIs are believed to have confirmed participation for the anchor tranche. While no confirmation was available, market sources said these could be Capital International and the Malaysian sovereign fund Khazana.

While 50% of the book will be for qualified institutional buyers, the balance 50% will be for high net worth individuals (HNIs) and retail investors. The company has also reserved some portion of the offering for L&T Group employees. The employees will get a 2 a share discount to the issue price, Deosthalee said. The proceeds from the issue will be used to augment the capital base of L&T Finance and L&T Infra and to meet the capital requirements arising out of expected growth in their assets, primarily the loan portfolio.

L&T Finance Holdings, the holding company for the financial services business of the L&T Group, has four arms that manage the mutual fund, asset financing, infrastructure financing and working capital funding businesses. This includes L&T Infrastructure Company , L&T Finance, India Infrastructure Developers , L&T Investment Management and L& T Mutual Fund Trustees . The last two are the subsidiaries of L&T Finance, N Sivaraman, L&T Finance Holdings president and whole-time director, said.

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