L&T Finance Holdings Ltd. (LTFH) completes the merger of its subsidiaries with itself

The merger is effective December 4, 2023; Merger will create a ‘Single Lending Entity’

PUNE: L&T Finance Holdings Ltd. (LTFH) the equity-listed holding company, today announced the successful completion of the merger of its subsidiaries, L&T Finance Ltd. (LTF), L&T Infra Credit Ltd. (LTICL) and L&T Mutual Fund Trustee Ltd. with itself. LTFH is a leading NBFC and offers a range of financial products and services under the L&T Finance brand. LTFH was the holding company while LTF and LTICL were high-value debt listed entities and operating entities. With this merger, all the lending businesses 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/ statutory authorities – Reserve Bank of India (RBI), National Company Law Tribunal (NCLT), Securities and Exchange Board of India (SEBI), and Stock Exchanges.

The key benefits of the merger include:

o    Enhanced governance and controls – A single entity structure will help enhance governance and controls owing to the simplification of corporate structure and elimination of duplication of various processes at multiple subsidiaries

o    Astute Liability management – Liquidity management for a single entity would bring in treasury and operational efficiency in terms of cost incurred for managing liquidity at multiple entities (subsidiaries) vis–a–vis that of one entity; thus, helping in astute liability management

o    Ability to provide enhanced return to shareholders – LTFH will become an operating lending entity from a holding company (Core Investment Company) thus generating direct profits from the lending businesses which will increase its ability to provide enhanced returns to its shareholders

o    Seamless compliance and adherence to RBI Scale Based Regulations – LTF was categorized as NBFC – Upper Layer under the extant RBI regulations, which mandates listing on the stock exchanges within three years from the date of such categorization. This would have led to two entities being equity-listed within L&T Finance. The merger avoids the creation of two equity-listed entities while ensuring seamless compliance with the RBI Scale-Based Regulations concerning listing

o    Operational efficiency: A single entity structure will facilitate operational efficiencies in terms of better utilization of management bandwidth, consolidation of systems & controls, and reduction in administrative cost/expenses

Commenting on the merger, Dinanath Dubhashi, Managing Director & CEO, 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. 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.”