According to sources, Larsen and Toubro Ltd (L&T) plans to list five operational road assets through an infrastructure investment trust (InvIT), a new structure cleared by the Indian capital market regulator to ease access to funds for infrastructure developers.
L&T, India's largest engineering and construction company, expects to raise more than Rs.20,000 million (around US$302 million) through this process.
L&T Infrastructure Development Projects Ltd (L&T IDPL), the infrastructure development arm of L&T, operates 17 road assets under separate special purpose vehicles (SPVs) of PPP contracts. L&T will list a few of these road assets from its infrastructure portfolio through the proposed InvIT as it looks to monetize its operational assets.
The Securities and Exchange Board of India (Sebi) had in August proposed easing of norms for InvITs as a way to encourage firms to unlock capital.
A domestic infrastructure investment trust can raise long-term funds from unit holders, helping developers unlock value in their operational or completed projects, or repay debt associated with those projects. Insurance companies and pension funds are the main potential buyers of this structures.
Then infrastructure companies can transfer a portfolio of their operational projects to such a trust and launch it in the market.
L&T has mandated Ernst and Young to find buyers for some of its road assets, according to local newspapers.
According to sources, at least three more infrastructure companies are readying plans to list their assets through InvITs, but are waiting for further clarity on the structure. MEP Infrastructure Developers Ltd could be one of them.