MUMBAI: L&T Finance has initiated a bidding process to sell non-performing loans worth Rs 3,022 crore to asset reconstruction companies. These loans are spread across 10 accounts, including Nirmal Lifestyle Developers, Nirmal Lifestyle Malls, and Supertech.
The largest loan up for sale is Nirmal Lifestyle Developers’ Rs 790-crore debt, followed by Supertech at Rs 515 crore and Nirmal Lifestyle Malls at Rs 251 crore, two sources in the know of the development said.
An L&T Finance spokesperson did not immediately respond to a request for comment.
Under the 15:85 structure, the lender is inviting expressions of interest from select asset reconstruction companies (ARCs), where L&T Finance’s maximum share in security receipts (SRs) will be 85%.
Interested bidders have until Monday to show their interest.
This move by L&T Finance is part of its efforts to pare its wholesale finance book, which includes both infrastructure finance and real estate finance.
“We are rapidly selling wholesale,” said Dinanath Dubhashi, CEO of L&T Finance. ” We don’t know which asset we will sell, whether it will be a Stage-1 or Stage-2, as we hardly have any Stage-3 assets in wholesale.”
The company has encountered challenges in both portfolios.
For real estate, L&T Finance had a specific structure in mind involving a private equity partner, but that arrangement did not receive regulatory approval, the management informed investors during a recent call.
In infrastructure finance, the problem was that even though it had hired an investment banker and found a potential buyer, the latter faced difficulties raising the necessary debt amount in the Indian market. They wanted L&T Finance to guarantee the debt, which defeated the purpose of selling the portfolio, the management said.
Consequently, L&T Finance has decided to sell assets individually at a discount. The wholesale finance book has now reduced to less than Rs 20,000 crore.
In March 2022, L&T Finance sold distressed loans worth Rs 3,463 crore to Phoenix ARC, backed by Kotak Mahindra Bank, as reported by ET. The acquisition was made for Rs 1,120 crore. In December 2022, L&T Finance and its subsidiary L&T Infra Credit sold distressed loans of Rs 1,827.5 crore to Arcil, backed by Avenue Capital, for Rs 1,092.5 crore, as reported. These transactions were also executed under the 15:85 structure, with 15% of the consideration paid upfront and the remaining in the form of SRs.