Buoyed by "extremely good response" for its debenture issue, L&T Finance today said it is open to enter into the mutual fund business through both organic and inorganic routes.
"Mutual fund is an area of interest for us. There are options for both organic and inorganic routes for that. We will look them and evaluate them," L&T Executive Vice-President (Financial Services) N Sivaraman said here.
There were enough mutual fund players to talk to who are particularly available for purchase, he said. Sivaraman's observation came in the face of reports that L&T Finance may be looking at acquiring DBS Cholamandalam Asset Management Company (DCAM), which manages funds in excess of Rs2,000 crore as on May 18, 2009.
To a pointed question whether the company was in talks with DCAM for acquisition, he said, "We don't want to comment on any particular company."
Established in 1996, DCAM is a subsidiary of Cholamandalam DBS Finance, a joint venture between India's Murugappa Group and Singapore's DBS Bank. DCAM offers 18 schemes and covers an entire range of cash, debt and equity asset classes. It had posted a loss before tax of Rs 5.32 crore in the first quarter of the current fiscal.
Sivaraman said L&T Finance was yet to apply to the market regulator SEBI for nod to foray into the mutual fund business. The company's Non-Convertible Debenture (NCD) issue, which was of Rs 500 crore with a greenshoe option of the same amount, has provisionally been oversubscribed by 3.86 times.
L&T Finance has received subscription of Rs 1930.84 crore. "We will accept applications up to Rs 1000 crore," he said, adding, the fund would be used for business growth, repaying some existing loans and creating assets among others.
L&T Finance might look at raising funds further, which could be done through institutional financing or an additional retail placement. "We will be raising funds since money is the only raw material in our business."
Sivaraman, however, ruled out any initial public offering of the company in the immediate future, saying the focus of L&T Finance would now be on creating asset and value. "The parent company (L&T) will consider it at an appropriate time," he said.
Sivaraman said insurance is also an area where L&T Finance intends to have its presence, but there the engineering and construction giant would have to be the sponsor. L&T Finance hopes its loan asset size would go up by 25 per cent this fiscal from Rs5,400 crore now.
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