Edelweiss Alternatives has finalized the acquisition of L&T Infrastructure Development Projects (LTIDPL) in a significant deal worth INR 6,000 Cr. The acquisition, which was initially announced in December 2022, is a strategic move for Edelweiss, enhancing its presence in the infrastructure sector.
Deal Completion and Portfolio Expansion
The venture is about buying LTIDPL, a joint venture owned by L&T, in a combined combination of road assets and a power transmission line. Based on this arrangement, Edelweiss will now have full ownership of the JV which potentially gives it total assets of 7 roads spanning 4,400 lane km and 960-circuit km of power transmission lines.
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This addition expands the portfolio from 25 to 26 assets, covering the entire power infra market. In terms of development, it will create 5,000 lane-km of roads, 1,800 km of power transmission assets and 813 MW of renewable energy. Whereas the total cumulative annual income of the properties will be around INR 3000 Cr.
Strategic Shift for L&T
The sale of LTIDPL aligns with L&T’s strategic objective of divesting non-core businesses to optimize its portfolio. By reducing exposure to asset-heavy developmental projects, L&T aims to enhance its return on equity. This move reflects the culmination of a strategic journey for L&T, initiated in the early 2000s in the Developmental Projects business, as stated by DK Sen, head of development projects at L&T.
Insights from Edelweiss Leadership
Srikumar Chatra, MD, Infrastructure Yield Strategy at Edelweiss Alternatives, said districts containing assets of national importance with a proven track record of revenues are what the fund considers prime acquisition targets. He cited geographical diversification as a key element that differentiates the assets from other investment vehicles, stating that their lifespan will be much longer than expected.
Subahu Choradia, Head of Real Assets Strategy at Edelweiss Alternatives, also alerts investors to the fact that only managers with competent management and operational capabilities can make successful infrastructure investments. He cited the determination of appropriate governance structures and a proven history of returns by investors as reasons for accepting this type of investment strategy.
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Future Prospects
The completion of the acquisition marks an important milestone for both Edelweiss Alternatives and L&T. With an expanded portfolio across critical infrastructure sectors, Edelweiss is poised to capitalize on the emerging opportunities in India’s infrastructure landscape. Meanwhile, L&T’s strategic restructuring underlines its commitment to optimize its business portfolio for sustainable growth.
As the infrastructure sector continues to grow, strategic acquisitions and partnerships are expected to play a key role in driving growth and innovation in the industry.
