Mumbai: Engineering major Larsen & Toubro (L&T) today said the Canada Pension Plan Investment Board (CPPIB) has agreed to invest over Rs 2,000 crore in its infrastructure arm L&T IDPL, a move that will help the company complete ongoing projects.
This is the first direct private investment by a Canadian pension fund in a domestic infra development company, Group Chief Financial Officer R Shankar Raman said in a statement.
Initially, CPPIB’s wholly owned subsidiary CPP Investment Board Singaporean Holdings 1 (CPPIBSH) will make an initial investment of Rs 1,000 crore in L&T Infrastructure Development Projects (L&T IDPL), a release issued here said.
This will be followed by a second tranche of Rs 1,000 crore, or a higher amount as may be agreed between the two, 12 months after the initial investment, it said.
“The investment board will buy preference shares of L&T IDPL, compulsorily convertible into equity shares by 2018 at a mutually agreed price. After conversion, the CPPIBSH will hold a minority stake in L&T Infrastructure,” according to the release.
Raman said that in the long term, the CPPIB would be an ideal partner for L&T and will provide growth capital to L&T IDPL to expand its infrastructure development business.
CPPIB Senior Vice-President, Private Investments, André Bourbonnais said, “This transaction represents CPPIB’s first investment in India’s infrastructure sector with a highly reputable partner and fits well with our strategy for the country as a key long-term growth market.”
L&T IDPL’s business includes development of roads and bridges, ports, metro rail, power transmission lines, wind energy and emerging sectors such as water and railways. It handles infrastructure assets with an estimated project cost of USD 7.5 billion comprising 23 projects across sectors.