Larsen & Toubro Ltd (L&T), the country’s largest construction and engineering company, aims to monetize its Hyderabad Metro project through the infrastructure investment trust (InvIT) route and has started reaching out to investors, said two people aware of the development.
The project is housed under L&T Metro Rail (Hyderabad) Ltd, a special purpose vehicle set up for the 71.16 kilometre, three-line elevated metro line under a 35-year concession, extendable by 25 years. The project was commissioned in February 2020.
L&T aims to raise between $500 million and $1 billion through the proposed InvIT, said one of the persons mentioned above, speaking on condition of anonymity as the talks are private.
“Bank of America is advising L&T on the InvIT. This is the first time in India someone is trying to use the InvIT structure for a Metro project. They are looking to tap sovereign wealth funds, pension funds and other long-term investors who are looking for good yields. The InvIT will help L&T deleverage it’s balance sheet," he said.
The work on the InvIT is in the initial stages and depending on the interest they receive from investors, the size of the fundraising could change, he said.
However, the work on the proposed InvIT has been slowed by the covid-19 pandemic, according to the other person mentioned above.
“Lockdown restrictions have meant that the metro is standing still for the last couple of months. How the pandemic impacts the metro project’s passenger numbers is something that will become clear only in the next few months. That will also impact how investors view the project and the timelines for launching the InvIT," he said.
An email sent to L&T did not elicit a response. Bank of America did not comment.