Infrastructure major Larsen & Toubro plans to sell stake in some of its port, road, power and metro rail projects to unlock shareholder value, chairman and managing director AM Naik said in a letter to shareholders on Tuesday.
The company “would be seeking to unlock value through churning of mature assets within the portfolio and through equity partnership,” the letter said without giving details.The offloading of stake could be aimed at reducing the portfolio size of the company as well as generating funds for new projects, said analysts.
Scrapping plans for initial public offering for its infrastructure development arm Infrastructure Development Projects (L&T IDPL), L&T recently was looking to raise R2,850 crore through private equity investments.
It now seems that the company wants to sell stake in individual projects, leaving aside the earlier plan of equity dilution in subsidiaries.
L&T IDPL handles a portfolio of infrastructure assets worth R45,000 crore including 19 road projects, three ports and a metro rail project in Hyderabad.
L&T holds 97.5% in IDPL.
The Hyderabad metro rail project, which L&T IDPL is now implementing through a subsidiary with a R14,917-crore outlay, could be a potential disinvestment candidate for L&T.
The L&T Group had 128 subsidiaries, 18 associates and 14 joint venture companies under its umbrella, as on March 31, 2012.
The company’s order-book size is also quite healthy. With an inflow of orders worth R70,574 crore in 2011-12, its unexecuted order book position rose to an all-time high of R145,723 crore, as on March 31, 2012. International orders accounted for 18% of the group’s full year inflow.
(With inputs from agencies)