How is Larsen and Toubro looking to monetize its Hyderabad project?

L&T will be looking to monetize its Hyderabad Metro project through the INVIT route and is already talking to investors. INVIT is like a mutual fund with the only difference being that it houses infrastructure assets portfolio. Hyderabad Metro is housed in a SPV set up for the 71.16 kilometre, three-line elevated metro line under a 35-year concession.

L&T proposes to raise up to $1 billion through the proposed INVIT. In the past, some of the large infrastructure plays like IRB Infra and even Reliance Jio have used the INVIT route quite successfully to make their business models asset-light and also to improve the return on equity or ROE in the process. This also reduces their cash drain on the project.

This move will be unique in India as it is the first time that a business will to use the INVIT structure for a Metro Rail project. L&T is talking to a slew of large investors through BOFA, its mandated lead manager for the INVIT. Potential investors include sovereign funds, pension funds and others that will help L&T to gradually deleverage its balance sheet.