L&T Finance sells real estate loans to Phoenix ARC for over Rs 1,000 crore, ET RealEstate

July 4, 2023

MUMBAI: L&T Finance, a subsidiary of listed L&T Finance Holdings, sold a stressed portfolio with total loans of ₹1,800 crore to Kotak Mahindra Bank-backed Phoenix Asset Reconstruction Company (ARC) at an auction last week, said people aware of the development.

The portfolio included six real estate accounts sold for ₹1,075 crore, equating to a 60% recovery for L&T Finance, the people said. The finance company invited offers under a 15:85 structure for ten accounts with a total loan of ₹3,022.5 crore, according to a notice issued by the finance company on its website early last month.

Phoenix ARC acquired Nirmal Lifestyle Developers with total loans of ₹790 crore, Nirmal Lifestyle Malls with loans of ₹231 crore, Brownish Realty (₹222 crore), Coast Realtors (₹113 crore), Poise Realtech (₹279 crore) and SU Toll Road (₹168 crore).

The other four accounts that were on sale but did not receive any offers include Supertech with loans of ₹515 crore, Mabsoot Buildhomes (₹276 crore), Coast Town Planners (₹279 crore) and Perpendicular Construction (₹148 crore).

L&T Finance and Phoenix ARC did not respond to ET’s request for comments. Over the last few quarters, L&T Finance has been selling distressed loans regularly under the 15:85 structure wherein 15% of the consideration is paid upfront and for 85% the ARC issues security receipts that are redeemed on recovery of loans. Phoenix ARC, too, acquired portfolio under 15:85 structure, people said.

In March, L&T Finance sold a ₹880 crore distressed loan portfolio to Avenue Capital-backed Asset Reconstruction Company of India (Arcil) for ₹700 crore under 15:85 structure, as reported by ET on March 28. The ₹880-crore portfolio comprised five real estate loans given to Pune-based Xrbia group. During the quarter end of December 2022, L&T Finance and its subsidiary L&T Infra Credit jointly sold ₹1,827.5 crore distressed loan pool to Arcil for ₹1,092.5 crore under the 15:85 structure, as reported by ET on December 31.

In its quarterly results, L&T Finance Holdings does not disclose its gross or net non-performing assets to investors. Its gross stage three (GS3) loans stood at ₹3,832 crore, or 4.7% of total loans, as of end March 2023, the company’s presentation to analysts showed.

The GS3 stood at ₹3,543 crore or 4.08% a year ago. It comprises loans due for more than 90 days and other stressed assets.

  • Published On Jul 4, 2023 at 08:41 AM IST

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