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Business News/ Companies / L&T seeks FIPB nod for foreign investment in road unit
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L&T seeks FIPB nod for foreign investment in road unit

L&T is in talks with a large global institutional investor to sell a stake in L&T IDPL

L&T’s road unit company runs 13 expressways and has five more under construction. Photo: Priyanka Parashar/MintPremium
L&T’s road unit company runs 13 expressways and has five more under construction. Photo: Priyanka Parashar/Mint

Mumbai: L&T Infrastructure Development Projects Ltd (L&T IDPL), a unit of Larsen and Toubro Ltd (L&T), has submitted an application to the Foreign Investment Promotion Board (FIPB) seeking approval for a proposed foreign direct investment in the company.

L&T, India’s largest engineering and construction company, is in talks with a large global institutional investor to sell a stake in L&T IDPL, the company said in a filing to the BSE.

“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 trance of 1000 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 November, L&T said it was considering an initial public offering (IPO) in Singapore for L&T IDPL as well as listing certain road assets of the unit through a business trust in Singapore.

L&T IDPL is engaged in public-private partnership projects in India with business interests spread across sectors including roads and bridges, ports, metro rail, wind energy and power transmission lines.

Unlisted Indian companies are allowed to list their shares on overseas stock exchanges without having to be publicly traded on domestic exchanges, the government said in September, in a move expected to help firms raise capital abroad and support the rupee.

Money raised abroad may be used for retiring foreign debt or for overseas operations including acquisitions, the finance ministry said in a statement. However, if the funds raised are not used abroad, they will have to be remitted to India within 15 days and parked in banks.

L&T’s road unit company runs 13 expressways and has five more under construction.

In October, Mint reported that Indian companies, especially those operating in the infrastructure space, had begun selling assets to pare their debt, a fallout of rising interest costs and decreasing margins in a sluggish economy that has taken a toll on growth.

Since January, at least 10 Indian companies have either sold or announced the sale of assets in a bid to pare 3.58 trillion worth of debt, according to Mint research and an August report by Credit Suisse Securities Research and Analytics.

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Published: 20 Dec 2013, 09:07 PM IST
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