FIPB, which has given the go-ahead to the deal, said on its website that CPP Investment Board Inc., a wholly-owned subsidiary of CPPIB which is being incorporated in Singapore, will invest the money through equity shares, compulsorily convertible preference shares and/or compulsorily convertible debentures.
“The per cent of stake to be sold/diluted by L&T IDPL will be decided at a later date because the pricing of shares is yet to be decided," a person briefed on the deal said on condition of anonymity. This is the first tranche of investment by CPPIB in L&T IDPL, he said, adding that CPPIB will investment a further ₹ 1,000 crore at a later date.
L&T IDPL, which builds and runs roads, ports and other infrastructure, said in December that it had filed an application with FIPB seeking approval for proposed FDI by a “large global investor" without disclosing any further details. “The company is engaged in discussions with a large global institutional investor for the proposed acquisition of a stake in L&T Infrastructure Development Projects," the company said in the December statement.
“Subject to completion of due diligence processes and necessary agreement on governance and other terms of the transaction with the investor, there is a contemplation of an initial infusion of ₹ 1,000 crore into L&T IDPL, followed by a second tranche of ₹ 1,000 crore (or such higher amount as may be agreed between the company and the investor) after 12 months from the date of the initial investment (subject to further regulatory approvals at such time where required)," the company said in a statement.
CPPIB, which manages $201.5 billion in funds, has a strategic alliance with Piramal Enterprises Ltd for providing structured debt financing to residential projects across India’s major urban centres. CPPIB and Piramal have each initially committed $250 million to the alliance.
CPPIB’s also has a strategic alliance with the Shapoorji Pallonji Group to acquire foreign direct investment (FDI)-compliant stabilized office buildings in India’s major metropolitan centres. CPPIB will own 80% of the venture with an initial equity commitment of $200 million.
L&T declined to comment. CPPIB could not be reached immediately for comment.