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Bain to buy $300m stake in L&T Finance

Bain buys $300m stake in L&T Fin - Shares of Larsen & Toubro (L&T) Finance rose over 4 percent to Rs. 66.75 on reports that U.S.-based Bain & Company wants to buy $300m stake in the company.

Bain has already made a `capital call' (or draw-down request usually issued when a new investment is finalized) as it moves to finalize the deal shortly. It might acquire 15-20 percent along with a board seat in the Y M Deosthalee-run company L&T, which owns 72 percent in the unit, has three board seats.

Bain, which had a limited period exclusivity to finalize the deal, will pay $250-300 million for the transaction. The deal will largely involve Bain infusing money into the company, though a source said it might involve some share purchase from parent L&T as well.

The transaction is being concluded at Rs 70-75 per share. On Friday, L&T Finance Holdings shares closed at Rs 64, giving the company a market value of Rs 11,000 crore, or $1.7 billion.

The company requires capital as part of its growth plans over the next few years and it continues to examine the capital requirements and would take appropriate decision to raise capital, L&T said.

The transaction points toward the American private equity giant's desire to expand beyond manufacturing and business outsourcing and into financial services in Asia's third largest economy.

Bain, which had invested in Hero MotoCorp and Genpact, said earlier this year that it will invest $3 billion in India if it spots attractive opportunities in ecommerce, financial services and pharmaceuticals, among others, in the next few years. The $75-billion asset manager has till date invested more than $1billion in half a dozen Indian companies.