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IFC leads $550-mn investment round in L&T Finance
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International Finance Corporation has led a $550 million (Rs 3,769 crore) investment round in L&T Finance Ltd, a wholly owned subsidiary of L&T Finance Holdings Ltd.

The financial services provider has already received the first tranche of $275 million from its investors, the company said in a statement on Thursday. Washington-headquartered IFC contributed $125 million.

BNP Paribas, Citibank and DBS Bank will also take part in the round, L&T Finance said.

The company said it will use the capital, being raised through external commercial borrowings, to expand its farm equipment finance portfolio by providing loans to farmers looking to acquire equipment to modernise their processes.

L&T Finance Holdings managing director and chief executive officer Dinanath Dubhashi said part of its strategy involved lending to customers who did not have access to last-mile credit. He added that the investment from IFC and other investors reaffirmed the company’s growth plans and its ability to diversify its liabilities.

Separately, IFC South Asia financial institutions group manager Hemalata Mahalingam said the project would promote inclusion for people looking to access finance. “Addressing the large rural finance gap and supporting modernization of agriculture are key components in sustaining India’s growth story,” she said.

The announcement comes three months after VCCircle reported that IFC was planning to provide $125 million to L&T Finance. Apart from that, the World Bank arm has also invested $75 million through senior financing in L&T Housing Finance Ltd, another subsidiary of L&T Finance Holdings.

L&T Finance is the financial services arm of engineering giant Larsen & Toubro Ltd. About 54% of L&T Finance’s book consists of rural financing, 26% is wholesale financing and 18% is real estate financing.

Through its operating units, L&T Finance Holdings provides rural, housing, wholesale and infrastructure finance services as well as investment and wealth management.

IFC

The L&T Finance deal is the latest in a series of investments by IFC, which has an active direct private equity-style practice in the country.

Earlier this week, VCCircle reported that IFC joined a consortium of investors that was in talks to seal a venture-stage management buyout of a business-to-business payments platform backed by software services company Tech Mahindra Ltd.

In May, IFC and Belgian private investment firm Verlinvest SA said it would invest Rs 280 crore (about $40.15 million) in the Future Group-owned Future Consumer Ltd.

The same month, it announced plans to invest up to $60 million in Mumbai-listed Deepak Fertilisers and Petrochemicals Corporation Ltd. It also offered to provide $50 million in debt funding to affordable housing loan provider Aavas Financiers Ltd to help it expand its housing finance programme in the semi-urban and rural parts of Rajasthan.

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