India's L&T Infra eyeing $250-$300 mln from PEs-sources

By Staff Reporter

May 25, 2012 08:40 AM EDT

India's L&T Infrastructure Development Projects Ltd (L&T IDPL) is in talks with private-equity investors including Temasek Holdings to raise $250 million to $300 million, three sources with direct knowledge of the matter said.

Emerging markets private-equity firm Actis and India's IDFC Project Equity are also in separate talks to invest in the company, said the sources, declining to be named as the talks are confidential.

L&T IDPL, a unit of India's top engineering conglomerate Larsen and Toubro, builds roads, bridges, ports and metro rail. It is currently handling projects worth 400 billion rupees ($7.2 billion), according to the company website.

The company will use the private-equity funding for capital expenditure purposes, two of the sources said, adding the private-equity investors are likely to hold up to 30 percent stake in L&T IDPL after the investments.

A Larsen & Toubro spokesman declined to comment. Actis' head of South Asia, J.M. Trivedi, did not immediately respond to an email seeking comment, while officials at IDFC Project Equity and Singapore state investor Temasek were not available.

Larsen & Toubro, which bears the name of its two Danish founders, is looking at an initial public offering of L&T IDPL unit, its chief financial officer R. Shankar Raman told Reuters in November last year.

A potential listing of the infrastructure unit was likely to happen within three years, he had said.

Shares in Larsen & Toubro, valued at nearly $13 billion, closed 1.7 percent higher at 1,168.45 rupees on Thursday, in line with gains in the broader Mumbai market. The stock is up 17 percent this year.

Private-equity investors are poised to play a key role in financing much-needed infrastructure projects in a country infamous for clogged roads and power outages, and lacking a mature local bond market to provide long-term project funding.

Poor infrastructure acts as a bottleneck to India's economic growth that slowed to 6.1 percent in the December last quarter, the weakest annual pace in almost three years.

India wants the private sector to invest hundreds of billions of dollars in infrastructure over the next five years.

But bureaucratic red tape, a lack of domestic long-term debt and battles between farmers and industry over land have hit construction and funding targets, hurting industrial growth.

Private equity companies invested $1.8 billion in India last year, almost unchanged from $1.7 billion in 2010, according to Thomson Reuters data. They have invested about $800 million so far this year, the data showed.

($1=55.7 rupees)

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