Posted on December 21, 2022
Indian contracting heavyweights Larsen & Toubro (L&T) has signed an agreement to divest its 51% stake in L&T Infrastructure Development Projects Limited (L&T IDPL) to a portfolio company of Infrastructure Yield Plus II, an infrastructure fund managed by Edelweiss Alternatives.
With this agreement, L&T will divest its entire stake in the concession subsidiary, L&T IDPL. The move is in line with the group’s strategy of reducing its exposure to the non-core asset-heavy developmental projects portfolio, the company said in a stock market filing.
L&T IDPL is a joint venture between Larsen & Toubro Limited and Canada Pension Plan Investment Board (CPP Investments). The companies own 51% and 49% of shares respectively.
Considered a pioneer in the public-private partnership (PPP) model of development in India, the company has been involved in the development of infrastructure projects by private sector players in partnership with the Central and State governments. The company has developed landmark infrastructure projects across key sectors like roads, bridges, ports, and urban infrastructure.
L&T’s move to release growth capital
Edelweiss Alternatives’ infrastructure strategy focuses on investing in quality operating infrastructure assets in core sectors of power transmission, renewable energy, and highways among others. Post this acquisition, the platform will have a high-quality diversified portfolio of 26 assets across 13 states, making it a leading infrastructure investor in India.
The transaction is subject to the completion of customary closing conditions including receipt of applicable regulatory and other approvals. Gross proceeds to both companies from the sale would be approximately $328.9 million (INR27.1 billion) before closing adjustments and other terms of the transaction.
Commenting on the agreement, D.K. Sen, whole-time director and senior executive vice president (Developmental Projects), said: “This development is a significant step towards the execution of our strategic Lakshya 2026 plan and houses L&T IDPL with Edelweiss Alternatives, an established and reputed alternatives platform with a better strategic fit.
“The transaction is a win-win for both. It will release growth capital for the group. Also, it will provide Edelweiss Alternatives with access to a good quality portfolio of assets.”