L&T Finance Holdings Successfully Completes Merger Creating Unified Lending Entity
L&T Finance Holdings Ltd. (LTFH), a leading Non-Banking Financial Company (NBFC), has completed the merger of its subsidiaries – L&T Finance Ltd. (LTF), L&T Infra Credit Ltd. (LTICL), and L&T Mutual Fund Trustee Ltd. The merger, effective December 4, 2023, marks a significant step in streamlining operations and consolidating all lending businesses under a single entity.
Streamlined Corporate Structure for Enhanced Governance
The merger, approved by the respective Boards in January 2023, received the green light from shareholders, creditors, and regulatory authorities, including the Reserve Bank of India (RBI), National Company Law Tribunal (NCLT), Securities and Exchange Board of India (SEBI), and Stock Exchanges. This move aims to simplify the corporate structure, bringing all lending businesses under LTFH.
Key Benefits of the Merger
1. Governance and Controls Enhancement: The single-entity structure enhances governance and controls by eliminating duplication of processes across multiple subsidiaries.
2. Astute Liability Management: Operating as a single entity improves liquidity management, leading to treasury and operational efficiency, ultimately reducing costs associated with managing liquidity.
3. Enhanced Returns for Shareholders: LTFH transitions from a holding company to an operating lending entity, directly generating profits from lending businesses, thus increasing the potential for enhanced returns to shareholders.
4. Seamless Compliance with RBI Scale-Based Regulations: The merger ensures compliance with RBI regulations, avoiding the listing of two equity entities within L&T Finance.
5. Operational Efficiency: The unified structure facilitates operational efficiencies, utilizing management bandwidth more effectively, consolidating systems and controls, and reducing administrative costs.
CEO’s Perspective
Mr. Dinanath Dubhashi, Managing Director & CEO of LTFH, expressed pleasure after the merger ahead of schedule. He highlighted the strategic importance of the decision in line with the company’s seven-year ‘Right Structure’ strategy, reducing the number of NBFCs from 8 to 1. The merger is expected to unlock new avenues for growth, innovation, and long-term success, creating sustainable value for stakeholders.
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