L&T Finance has entered the gold loan business by acquiring Paul Merchants Finance Pvt. Ltd.’s (PMFL) gold loan segment for ₹537 crore. This deal expands L&T Finance’s secured loan offerings and includes 130 branches across key states like Punjab, Haryana, and Gujarat. The acquisition also brings in 700 employees and a 24/7 security centre for monitoring. With assets under management of ₹1,000 crore and over 98,000 customers, L&T Finance aims to scale operations quickly. The deal is expected to close by Q2 of FY 2025-26, pending regulatory approvals.
What is L&T Finance?
L&T Finance is a leading non-banking financial company (NBFC) in India, part of the Larsen & Toubro (L&T) Group. It provides a wide range of financial services, including retail, rural, housing, and infrastructure finance. The company focuses on secured lending products like farm equipment loans, two-wheeler loans, home loans, and microfinance.
Recently, it has expanded into the gold loan segment through acquisitions. L&T Finance is known for its strong digital capabilities, customer-focused approach, and efforts to drive sustainable and profitable growth in India’s financial sector.
Why is This Funding Significant?
This funding is significant as it marks L&T Finance’s strategic entry into the gold loan market, strengthening its secured lending portfolio. The acquisition provides an existing network of 130 branches and over 98,000 active customers, allowing L&T Finance to scale its gold loan operations 36 months faster than if it built the business from scratch.
With ₹1,000 crore in assets under management, this move enhances the company’s financial position, diversifies its revenue streams, and reduces risk. It also enables L&T Finance to expand into key regions like Chandigarh, Punjab, Haryana, and Gujarat, improving market penetration and financial inclusion.
Additionally, this acquisition positions the company to compete directly with established gold loan providers like Muthoot Finance and Manappuram Finance, strengthening its foothold in the sector. The deal aligns with L&T Finance’s long-term strategy of sustainable growth in secured lending while ensuring compliance with regulatory requirements.
How Will the Funds Be Used?
The funds from this acquisition will be used to expand and strengthen L&T Finance’s gold loan business. A significant portion will go towards integrating Paul Merchants Finance’s (PMFL) existing network of 130 branches and 700 employees into L&T Finance’s operations.
Additionally, the company will invest in technology and digital infrastructure to enhance gold loan processing, improve customer experience, and ensure efficient remote monitoring through its 24/7 security centre.
L&T Finance will also use the funds to scale its operations quickly, leveraging the acquired ₹1,000 crore in assets under management (AUM) and 98,000+ active customers. This will help in expanding its reach in strategically important markets like Punjab, Haryana, Gujarat, and Rajasthan, where gold loans are in high demand.
Furthermore, the company aims to strengthen risk management and compliance frameworks to align with regulatory requirements. Overall, the funds will enable L&T Finance to establish itself as a key player in the gold loan sector, accelerate growth by 36 months, and drive higher returns through secured lending products.
Founders’ Perspective
The founders of Paul Merchants Finance Pvt. Ltd. (PMFL) have always been driven by a vision of growth and financial inclusion. Mr. Sat Paul Bansal, who established the company, built it on strong business ethics and a commitment to serving customers with innovative financial solutions. His son, Mr. Rajneesh Bansal, who joined the company in 2010, played a key role in expanding its presence in the financial sector.
Commenting on the acquisition by L&T Finance, the leadership at PMFL expressed confidence in the future of the gold loan business under its new ownership.
The founders see this deal as a strategic move that aligns with their long-term vision of empowering customers through accessible and secured financial products. While PMFL transitions out of the gold loan sector, it remains committed to exploring new opportunities in the financial services space, ensuring continued growth and innovation.
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Key Takeaways
- L&T Finance Enters the Gold Loan Market – The acquisition of Paul Merchants Finance’s gold loan business marks L&T Finance’s strategic expansion into the high-yield gold loan segment, strengthening its secured lending portfolio.
- ₹537 Crore All-Cash Deal – The acquisition was structured as a slump sale, with a lumpsum consideration of ₹537 crore, subject to final adjustments before closing.
- Rapid Expansion with Existing Network – L&T Finance gains 130 operational branches, 700 employees, and over 98,000 active customers, accelerating its gold loan business growth by 36 months.
- Market Penetration in Key States – The deal gives L&T Finance a strong presence in Chandigarh, Punjab, Haryana, Gujarat, Rajasthan, Madhya Pradesh, and Uttarakhand, expanding its reach in less penetrated markets.
- Stronger Financial Position – The acquired gold loan business brings ₹1,000 crore in assets under management (AUM), enhancing L&T Finance’s revenue streams and secured lending offerings.
Conclusion:
The acquisition of Paul Merchants Finance’s gold loan business marks a significant milestone in L&T Finance’s growth strategy. By entering the gold loan market with an established network, the company is set to expand its secured lending portfolio and strengthen its financial position. With ₹1,000 crore in assets under management and a presence in key regions, L&T Finance is well-positioned for rapid growth.
The company aims to leverage digital innovations, enhance customer experience, and compete with industry leaders. As regulatory approvals progress, this acquisition paves the way for long-term expansion, increased profitability, and a stronger foothold in financial services.
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