Canada Pension Fund to invest Rs 1000 crore in L&T�s infra unit

Q: Engineering major Larsen & Toubro has agreed to sell a minority stake in infrastructure development unit IDPL to an arm the Canada Pension Plan Investment Board (CPPIB) for Rs 1,000 crore.

Kishore Pathak, Mumbai

31st December 2014

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Replies (7)

But at the same time they should keep in mind that investors are being too selective. They had to make a lot of effort to convince them about India's long-term growth. They did not have a problem investing in L&T but they had concerns about government's policies and support towards infrastructure.

Arup rajan, Mumbai

31st December 2014

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Indian infrastructure companies such as GMR, GVK and Lanco are on the lookout for investors to free their capital for future projects. Many cash-strapped developers are also seeking distress sale of assets.

Vineet Tendulkar, Mumbai

31st December 2014

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Do you know that the stake sale is part of the Indian engineering company's strategy to deleverage its investment in projects that it is developing under the public-private partnership model. The company is also in the process of getting a trust, backed by six of its operational road projects, listed in Singapore. The investment from the Canadian fund will help L&T time the listing of the Singapore trust better.

Arup rajan, Mumbai

31st December 2014

Comment

At the same time this transaction represents CPPIB's first investment in India's infrastructure sector. They look forward to partnering with L&T and L&T IDPL's experienced management teams as they build their infrastructure platform in India over the long term.

Vineet Tendulkar, Mumbai

31st December 2014

Comment

The Canadian fund is buying L&T IDPL's preference shares that are compulsorily convertible into equity shares by 2018 at a valuation to be determined as per a mutually agreed process. After the conversion, the CPPIB arm will hold a minority stake in L&T IDPL.

Arup rajan, Mumbai

31st December 2014

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Yes, with its long-term view, CPPIB would be an ideal partner for L&T and will provide growth capital to L&T IDPL to expand its infrastructure development business.

Vineet Tendulkar, Mumbai

31st December 2014

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As per L&T Chief Financial Officer they have done the deal in a way that they secure the investor's interest and at the same time they have deferred the valuation to a time where the normalisation of business takes place and their valuation does not suffer due to the turbulent macroeconomic factors.

Arup rajan, Mumbai

31st December 2014

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