MUMBAI: L&T Infrastructure Development Projects is in advanced negotiations to divest up to 20% stake to marquee investors, including Malaysian sovereign fundKhazanah. Abu Dhabi-headquartered MubadalaDevelopment Corporation and US-based fund Capital International are also in the final list of potential investors, according to three people familiar with the negotiations.
The infrastructure arm of LarsenBSE 0.83 % & Toubro, which handles assets worth Rs 45,000 crore, will raise up to Rs 2,500 crore by selling stakes to potential investors, the people said.
The proposed transaction will value the infrastructure company at around Rs 12,500 crore, or just under $2 billion, making it one of the larger fund-raising exercises in recent times. It also signals continuing appetite for quality assets despite the gloom that surrounds the Indian infrastructure sector.
L&T IDPL Managing Director KV Venkatesh described queries on the transaction as speculative. "I do not want to comment on any specific transactions. These are all speculative in nature."
Khazanah and Mubadala Development Corporation did not answer questions on the subject.
The top management of L&T and IDPL will hold a review meeting on the infrastructure business in Mumbai on Monday, which will consider the proposed deal. L&T Chairman AM Naik, L&T Finance Chairman YM Deosthalee, L&T CFO R Shankar Raman and IDPL's KV Venkatesh will take part in the meeting. "Yes, there is a review meeting of IDPL tomorrow (Monday). It will also take up the stake sale plan," said one of the people.
ET had reported on October 19, 2012, that global funds were interested in picking up a stake in IDPL. Though bulge-bracket PE funds such as Temasek had put in formal bids, they had subsequently opted out.
MANY DEALS IN INFRASTRUCTURE SECTOR
SBI Macquarie has recently bought 74% stake in GMRBSE 3.25 % Jadcherla Expressways. Many other domestic as well as global investors are in final stages of acquiring stakes in road and port assets.
L&T IDPL currently handles a portfolio of infrastructure assets worth around Rs 45,000 crore, which include 19 road projects, three ports and a metro rail project. Of this, the Rs 16,400-crore Hyderabad Metro project, being implemented on the build-operate-transfer model, is the most ambitious. After listing its financial services arm, L&T Finance, the engineering major had said that by FY13, it would also try to list its cash-guzzling infrastructure business.
There is a strategic rationale to this. L&T IDPL's debt, though housed under various project-level SPVs with no recourse to the parent, impacts L&T's credit ratings on a consolidated basis. The Hyderabad Metro alone, for example, will need close to Rs 12,000 crore of 10-year project debt.