L&T Finance Holdings announces completion of merger of its subsidiaries with itself – Industry News

L&T Finance Holdings Ltd (LTFH), the equity listed holding company, on Monday announced the successful completion of the merger of its subsidiaries, L&T Finance Limited (LTF), L&T Infra Credit Limited (LTICL) and L&T Mutual Fund Trustee Limited with itself, the company confirmed in a regulatory filing. It further said that the merger comes into effect on December 4, 2023 and the process was completed post requisite shareholders’, creditors’ and regulatory/statutory approvals. 

The merger will lead to creation of a simplified ‘Single Lending Entity’; thus, housing all lending businesses under one operating Non-Banking Financial Company (NBFC), it said. 

“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 company 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,” said Dinanath Dubhashi, Managing Director & CEO, LTFH. 

“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,” said Dinanath Dubhashi. 

Benefits of the merger

The merger will lead to a single entity structure that will help enhance governance and controls owing to simplification of corporate structure and elimination of duplication of various processes at multiple subsidiaries. Further, liquidity management for a single entity would bring in treasury and operational efficiency in terms of cost incurred for managing liquidity at multiple entities. The company also said that 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. 

The company further said that 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 creation of two equity listed entities while ensuring seamless compliance with the RBI Scale Based Regulations with respect to listing,” it said. A single entity structure will facilitate operational efficiencies in terms of better utilisation of management bandwidth, consolidation of systems & controls and reduction in administrative cost / expenses.