L&T Finance Holdings shares rise over 5 per cent on Bain Capital reports

Private equity player Bain Capital is acquiring between 15 and 20 per cent in L&T Finance Holdings, taking its up more than 5 per cent, hitting an intra-day high of Rs 66 following reports of the deal.

According to a Times of India report, which  cited sources, Bain Capital planned to acquire a $300 million (nearly Rs 2,000 crore) stake in L&T Finance Holdings, the financial services unit of construction and engineering conglomerate L&T.

The report further said, that the private equity player would likely buy a stake at Rs70-75 per share. L&T currently holds a 72-per cent stake in L&T Finance Holdings.

L&T Finance Holdings had reported a 15-per cent increase in net profit at Rs192 crore in the first quarter ended June 2015.

Its loans and advances as on 30 June increased by 21 per cent to Rs49,219 crore as against Rs40,764 crore in the year-ago period, it added.

The transaction signalled Bain's desire to expand beyond business outsourcing and manufacturing and into financial services in Asia's third-largest economy, according to commentators.

Meanwhile, L&T Finance Holdings chairman and managing director Y M Deosthalee said while the government tried to boost the economy and kickstart employment generation, it must focus on reviving demand, especially in rural markets, by "focussing on low-hanging fruits.''

"The biggest problem facing the economy is lack of demand. And only the government can help revive this as corporates have built up overcapacity in the past and are stretched financially now.

"To achieve this, it must focus more on the low-hanging fruits by picking those projects which can easily be restarted and generate jobs," Deosthalee told PTI in an interaction.

He added that it could be noted that most of the mass marketers like small car and bike makers, FMCG companies, whitegoods makers and tractor makers, among others, had all been been reporting steady declines in rural sales for many months now.

Deosthalee, who headed one of the largest NBFCs, said sensing rural distress, his company had already cut back on  its lending in rural markets.