Canada Pension Plan Investment Board (CPPIB) announced that its subsidiary CPP Investment Board Singaporean Holdings I (CPPIBSH) has entered into a definitive agreement with Larsen & Toubro Limited (L&T) to invest Rs10 billion (US$166 million) in L&T's subsidiary, L&T Infrastructure Development Projects Limited (L&T IDPL).
CPPIBSH is also committed to a second tranche of Rs10 billion (US$166 million), to be invested 12 months following the initial investment (subject to any required regulatory approvals at such time).
Under the agreement, CPPIBSH will invest in L&T IDPL preference shares which will be compulsorily convertible into equity shares by 2018 at a valuation to be determined by a mutually agreed process. Post conversion, CPPIBSH will hold a minority stake in the equity capital of L&T IDPL.
L&T is the largest engineering and construction company in India. L&T IDPL owns the largest toll-road concession portfolio in India, including 19 toll-roads spanning over 2,200 kilometres, connecting some of the most important cities, ports and economic corridors in India. L&T IDPL also owns a power transmission line project, and a metro project in Hyderabad.
André Bourbonnais, Senior Vice-President at Private Investments CPPIB, stated:
This transaction represents CPPIB's first investment in India's infrastructure sector with a highly reputable partner and fits well with our strategy for India as a key long-term growth market. We look forward to partnering with L&T and L&T IDPL's experienced management teams as we build our infrastructure platform in India over the long term.
R. Shankar Raman, Chief Financial Officer and Member of the Board of Directors, L&T, stated:
We are pleased to form this new partnership with CPPIB. With its long-term view, CPPIB is an ideal partner for L&T and will provide growth capital to L&T IDPL to expand its infrastructure development business.
L&T IDPL has business interests in the development of roads and bridges, ports, metro rail, power transmission lines, wind energy and emerging sectors such as water and railways, and handles a portfolio of infrastructure assets with estimated project costs of US$7.5 billion comprising of 23 projects across sectors.