The investment will be paid in two stages, with INR10bn ($116m) due to be paid to Larsen’s Infrastructure Development Projects Limited subsidiary initially, and another lump sum of the same amount to be laid down 12 months later.
The deal states that CPP will invest in Larsen preference shares which will be compulsorily convertible into equity shares by 2018 at a mutually decided value. After that, the firm will hold a minority stake in the equity capital of Larsen.
CPPIB senior vice-president André Bourbonnais said, “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.”
Larsen & Toubro is an Indian technology, engineering, construction, manufacturing and financial services business which owns 19 toll-roads spanning over 2,200 kilometres. L&T IDPL also owns a power transmission line project, and a metro project in Hyderabad.
The Canada Pension Plan has its sights set firmly beyond the border, having set up new offices in New York and Brazil, alongside existing bases in London and Hong Kong.
The investment body reported in August 2013 that its direct private equity assets had risen by more than 26 per cent despite a “turbulent” quarter according to its latest fiscal results with buyout investments worth $9.8bn as of June 30.
Copyright © 2014 AltAssets