Larsen sees March date for asset sales to fuel IT buying spree
MUMBAI: Larsen & Toubro Ltd, India’s largest engineering and construction group, said it expects to sell its electrical unit and spin out its road assets trust by March 2018, a sign funding for plans to acquire more companies in information technology will soon be in place.
Schneider Electric SE is in exclusive talks to buy the electrical unit, valuing it at around US$2bil, people familiar with the matter said last week. Due diligence is underway, as are talks with investors on an initial public offering for some road assets, Larsen chief financial officer R Shankar Raman said in a Nov 20 interview.
The airports-to-submarines maker has been pruning non-strategic and sub-scale businesses under a plan to spur growth through acquisitions in information technology, where margins are higher.
The push into IT is urgent, said Raman, as Larsen must contend with bigger, more entrenched rivals including Tata Consultancy Services Ltd and Infosys Ltd.
“We don’t have time on our side and we need to jump start for bridging the gap,” Raman said. “Acquisitions would be one of the ways to do that.”
He declined to identify any deal targets, though he said the company is looking to buy businesses that can’t scale up on their own.
The firm is looking in Silicon Valley and India for deals valued at between US$20mil and US$100mil, Raman said.
“Whether it is analytics, mobility, cloud or artificial intelligence, they are all opportunities for us to draw closer to larger peers,” he said.
The L&T Technology unit acquired US-based Esencia Technologies Inc in June for US$27mil, it said in a filing.
Earlier this month, the L&T Infotech unit said it plans to acquire Luxembourgheadquartered Syncordis SA for 15 million euros (US$18mil). — Bloomberg