L&T eyes stake in two road projects

MUMBAI: The $12-billion engineering major Larsen & Toubro is scouting to acquire majority stake in road projects worth around Rs 1,000 crore each to boost its portfolio, company sources said.

“We have an appetite to acquire two road projects and we are talking to developers. We are evaluating projects very carefully to make sure there are no pending technical or legal issues,” an official told ET. L&T, which has interests in the roads space as a developer as well as a contractor for projects, would make the acquisition through subsidiary L&T Infrastructure Development Project (L&T IDPL).

L&T IDPL plans to acquire 74% in National Highways Authority of India (NHAI) projects being developed by others companies. It would consider projects that do not dilute the company’s internal rate of return which is around 18-20% on the current projects.

Cash-strapped infrastructure developers are looking at inducting equity investors, mostly at a subsidiary or special purpose vehicle level, to finance their growth. In September, Hindustan Construction Company sold 14.5% stake in subsidiary HCC Concessions, which is a holding company for build-operate-transfer road projects, for Rs 240 crore to global investment firm Xander Group.

Companies like Hyderabadbased IVRCL Assets and Holdings and Ashoka Buildcon are keen to induct strategic investors for the road projects. According to industry experts, more than 20 projects measuring around 2,000 km of NHAI road projects worth aroundRs 20-25,000 crore are in distress.