The Canada Pension Plan Investment Board (CPPIB) has invested in India’s infrastructure sector.
Since CPPIB views India as a key long-term growth market, one of its subsidiaries (CPP Investment Board Singaporean Holdings) has entered into a definitive agreement with Larsen & Toubro Limited to initially invest approximately US$166 million.
That subsidiary is also committed to a second installment of approximately US$166 million, which will be invested 12 months after the initial investment.
Larsen & Toubro is the largest engineering and construction company in India. It owns a toll-road concession portfolio that includes 19 toll-roads. The roads span more than 2,000 kilometers and connect some of the country’s key cities, ports and economic corridors.
Larsen & Toubro also owns a power transmission line project and a metro project in Hyderabad.
Under the agreement, CPPIBSH will invest in preference shares that must be converted into equity shares by 2018, at a valuation to be determined by a mutually agreed process.
Post conversion, CPPIBSH will hold a minority stake in the equity capital of Larsen & Toubro.
“This transaction represents CPPIB’s first investment in India’s infrastructure sector,” says Andre Bourbonnais, senior vice president of private investment at CPPIB. “India [is] a key long-term growth market.”
The transaction is subject to customary closing conditions and approvals from relevant governmental authorities and regulators.