Hi fellow investor,
( Disclosure: I own shares of L&T Finance Holding Ltd and hence my views maybe biased. Everything I conclude in the article is solely my opinion, based on publicly available information. This should not be taken as financial advice. This is purely for educational purpose.)
Let’s get straight into it.
Short History!
L&T Finance (LTFS) was incorporated in 1994, they started Infrastructure and commercial vehicle financing in 2007, before starting Micro Finance and Loan against shares (LAS) in 2008. LTFS bought Chola DBS AMC (AUM= Rs 30bn) for Rs 450 mn in 2009, thus entering the MF industry. In 2011, LTFS got listed on the bourses, with a loan book size of Rs 200bn. 2012 was busy year for them, they bought Fidelity’s MF business (AUM= Rs 90bn) for around Rs 5.5bn, and entered 2W financing and Housing Finance, acquiring Family Credit Ltd and IndoPacific HF Ltd, respectively. Thus taking their loan book size to Rs 300bn by end of FY12.
By 2015, LTFS had multiple lines of business, Micro Finance, Vehicle financing ( including CV, 2W and Cars), Housing finance & Project finance, SME and Corporate Finance, Wholesale Finance, as well as, Investment management and Wealth management businesses. The company had expanded into these businesses as they would have made sense for a bank (but not a NBFC), and had applied for a banking license in 2014, which they didn’t get.
In FY16, they decided to rationalise their lending business, and defocus from lines in which they didn’t have a “Right to Win”. Thus they streamlined their lending business into three segments Rural Finance- including 2W finance, Micro Finance, and Farm Equipment Finance ( tractor loans); Housing Finance- including Housing loans, Loan against property (LAP) and Real Estate Finance; & Infrastructure Finance- loans to sectors like renewables, road and transmission projects. They also sold off their Wealth management business in 2020, to IIFL for around Rs 2.3 bn.