Canadian pension fund arm picks stake in L&T's infra subsidiary for Rs. 1,000 cr.

Engineering and construction giant Larsen and Toubro has agreed to sell a minority stake in its subsidiary Infrastructure Development Projects Ltd. (IDPL) to the Canada Pension Plan Investment Board's Singapore arm for Rs. 1,000 crore.

CPP Investment Board Singaporean Holdings 1 will pick up the stake; the size will be decided later based on valuations. This will be followed by a second tranche of Rs. 1,000 crore or more, as may be agreed upon by the two entities after 12 months from the date of the first investment.

Asked how many IDPL preference shares would be allotted in the first tranche, R Shankar Raman, Chief Financial Officer, L&T, told Business Line that the company was working out the quantum.

As to when L&T would begin the process of conversion of the compulsorily convertible preference shares to equity, Raman said the valuation would be decided by 2018 according to a mutually agreed process.

Responding to how much stake L&T would be comfortable to part with in IDPL, Raman said there was no agreed percentage and the extent of dilution would depend on the value 'we achieve' before the conversion.

HBL