L&T unit plans to raise Rs3,200 crore via InvIT
Mumbai: L &T Infrastructure Development Projects Ltd, (L&T IDPL) a subsidiary of Larsen and Toubro Ltd (L&T), plans to raise about Rs3,200 crore this week through an infrastructure investment trust (InvIT), two people aware of the development said. The InvIT, to be called IndInfravit Trust, will raise money solely from institutional investors.
An L&T spokesperson confirmed the company’s plans.
One of the two people cited above said IndInfravit Trust will complete raising funds before the end of the week. The person added that the fund is seeing overwhelming response from pension funds and insurance companies, and has raised enough commitments for the InvIT to be fully subscribed.
L&T IDPL will be the InvIT’s sponsor and the trust will be launched with five completed road projects from the sponsor, the person mentioned above said. The InvIT units will bear a face value of Rs100 and offer an implied rate of return of 12%.
L&T IDPL’s latest annual report shows it reported a Rs222.22 net loss in FY17. It is developing the Hyderabad Metro Rail and the Kudgi power transmission line project in Karnataka, apart from roads and bridges won through competitive bidding.
According to L&T IDPL’s website, its roads portfolio includes 17 projects, of which 15 are operational and two under implementation. It has 33 toll plazas across the country and five more will be developed over the next three years.
Capital market regulator Sebi notified regulations for InvITs in 2014 that would allow private infrastructure firms to monetize operational assets and ease their debt burden.
However, investor interest in InvITs has been lukewarm.
L&T IDPL will be only the third firm to take the InvIT route to monetize some of its operational projects; it will be the first to raise funds through private placement solely from institutional investors.