L&T Finance to raise Rs500 crore through debenture issue

L&T Finance Co, a fully owned unit of engineering conglomerate Larsen & Toubro Ltd, plans to raise up to Rs500 crore through a non-convertible debenture issue that opened today. The issue includes an option to retain over-subscriptions of up to Rs500 crore. The issue is scheduled to close on 4 September.

The funds will be used to boost lending and investment, and for other operations including capital expenditure and working capital requirements. "Currently there is no plan of inorganic growth in L&T Finance," Larsen & Toubro's chief financial officer Y M Deosthalee told reporters at a conference in Mumbai.

L&T Finance, which plans to enter the general insurance business, will sell five-year bonds with an annualised yield of 9.85 per cent, 88-month bonds with an annualised yield of 9.95 per cent and 10-year bonds with an annualised yield of 10.50 per cent.

The bonds are rated 'AA-plus' by CARE and 'LAA-plus' by ICRA, indicating high credit quality.

Of the total amount, 35 per cent is allocated for retail investors, 30 per cent for non-institutional investors, and 35 per cent for qualified institutional buyers, which includes 10 per cent allocated to pension, provident and superannuation funds.The minimum application amount for retail investors is Rs10,000, while for high net worth individuals and qualified institutional buyers it is Rs1,01,000.

''Through the issue, we will be adding one more source of funding and broadbasing the investor base,'' Deosthalee said.