Larsen & Toubro has divested in entire stake in L&T Infrastructure Development Projects Ltd (L&T IDPL) under which was housed L&T’s developmental projects portfolio.
In a communication to stock exchanges dated December 20, 2022, L&T said that it has signed an agreement to divest its 51 per cent stake in L&T IDPL to a portfolio company of “Yield Plus II” – an infrastructure fund managed by Edelweiss Alternatives.
“This is in line with L&T’s strategy of reducing its exposure to the non-core asset heavy developmental projects portfolio,” the statement said.
L&T IDPL is a joint venture between Larsen & Toubro Ltd and Canada Pension Plan Investment Board (CPP Investments) holding 51 per cent and 49 per cent equity, respectively.
Gross proceeds to L&T and CPP investments from the sale would be approximately Rs.27,234 million before closing adjustments and other terms of the transaction.
PPP pioneer
L&T IDPL has been a pioneer in the public-private-partnership (PPP) model of development in India, which involved development of infrastructure projects by private sector players in partnership with the Central and state governments. L&T IDPL has developed landmark infrastructure projects across key sectors like roads, bridges, ports and urban infrastructure.
Impact on power transmission
L&T’s exposure to the power transmission development business was limited to one intrastate transmission system (ISTS) project that was awarded under the TBCB route. In around August 2013, L&T-IDPL won a transmission scheme for evacuation of power from NTPC’s Kudgi thermal power project (Phase 1 of 3×800 mw) in Karnataka. This scheme was housed under a wholly-owned subsidiary of L&T-IDPL called “Kudgi Transmission Ltd.” This transmission scheme, comprising 400kV and 765kV lines, was fully commissioned in September 2016 and is since commercially operational. In the financial year ending March 31, 2022, Kudgi Transmission’s income from operations stood at around Rs.226 crore.
It may be recalled that in August 2021, L&T had identified the Kudgi transmission project for divestment, as part of the company’s plan of completely exiting the non-core business of project development.
Sharper infra focus
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.
Also read: Larsen & Toubro Wins More Orders For Kudankulam Nuclear Power Plant
Win-Win situation
“The transaction is a win-win for both L&T and Edelweiss. It will release growth capital for the L&T Group. Also, it will provide Edelweiss Alternatives with access to a good quality portfolio of assets.” according to D.K. Sen, Whole-time Director & Sr. Executive Vice President (Developmental Projects), L&T.
