L&T Finance to open rights issue of Rs 3,000 crore on February 1

The board of the non-bank lender L&T Finance Holdings (LTFH) on Monday approved raising of up to Rs 3,000 crore through a rights issue. As per the regulatory filing, the offer will open on February 1, 2021, and close on February 15, 2021.

The lender has fixed a price of Rs 65 per equity share (including a premium of Rs 55 per Equity Share) for the offer for the fully paid-up Equity Shares of the face value of Rs 10 each. The record date has been fixed on January 22, 2021, to determine the equity shareholders entitled to receive the rights entitlement in the Rights Issue.

The rights entitlement ratio has been kept at 17:74 (17 equity shares for every 74 shares held by the Eligible Equity Shareholders of the company), as on the record date. If the shareholding of any of the Eligible Equity Shareholder is 5 or more, such shareholders will be entitled to at least 1 Equity Share.

A rights issue is a fundraising tool to mobilize capital from existing shareholders of a company. Shares are generally offered at a discount to prevailing market price in a rights issue.

Last week, L&T Finance Holdings Ltd. (LTFH), reported a 51 per cent decline in consolidated net profit at Rs 291 crore for the third quarter ended December 31, 2020, against Rs 591 crore in the corresponding quarter of the last fiscal year.

During the October-December period, the company posted the highest quarterly disbursements since Q1 FY20, up by 51 per cent QoQ. Farm Equipment disbursements rose by 43 per cent QoQ at Rs 1,554 crore in Q3 FY21 over Rs 1,089 crore in Q2 FY21. Two-wheeler disbursements were up 50 per cent at Rs 1,652 crore compared to Rs 1,102 crore in the September quarter of the current fiscal.