L&T finds it difficult to divest stake in infra arm IDPL

Construction giant L&T's attempts to raise capital in its infrastructure development arm IDPL is proving to be tougher than anticipated. Speaking to CNBC TV18 at the CFO Awards Jury Round, L&T's R Shankar Raman said the company's attempts to dilute stake in IDPL is being derailed due to the country's economic uncertainty.

It's been a year since L&T has been attempting to divest stake in its infrastructure arm IDPL. While reports suggest the company is hoping to raise over USD 500 million through a possible stake sale and is in advanced discussions with sovereign wealth funds and pension funds, the management says determining valuations of assets in this economic scenario is taking longer than expected.
R Shankar Raman, CFO, L&T, says: “Several distressed assets all around. Investors are finding it difficult to make a call on India if it would continue to grow or remain static. Here valuations of assets have become a challenge and there is time loss in transaction.”
Now, plagued by multiple challenges such as delayed policy decisions and clearances and rising input and labour costs, the construction industry has seen many road projects being stalled. But L&T remains undeterred. It is going in for the stake sale to raise part of the USD 1.5 million IDPL needs to cater to its portfolio of 18 road projects, 10 of which are operational.
R Shankar Raman, CFO, L&T, says: “We are committed to this transaction. We want to raise capital to participate in the next round of infrastructure development.”
The management, however, stayed away from giving any time line for closing the deal. But experts say in this stressed environment it will be challenging and the company may have to end up looking at other funding options.