L&T Infra Debt Fund calls off $110m deal with Apis Partners

The Mumbai-based company said the expiration of the long stop date is the reason the UK-based PE firm will not be acquiring a minority stake in the company.

India’s L&T Infra Debt Fund has called off a deal announced last April that would have seen UK private equity firm Apis Partners acquire up to a 25.1 percent stake in the Indian company for $110 million.

Its parent company, financial services conglomerate L&T Finance Holdings, the infrastructure finance arm of Indian engineering giant Larsen & Toubro, said the proposed transaction has been terminated “due to expiry of the long stop date”, in a filing submitted to the Bombay Stock Exchange.

It did not provide further details and did not respond to a request for comment.

“L&T Infra Debt Fund is currently not listed and hence there is no stock price impact immediately,” Manushree Saggar, vice-president at ratings agency ICRA India, told Infrastructure Investor. “However, considering the proposed amalgamation within the L&T Finance Holdings, there could be constraints regarding L&T Infra Debt Fund complying with the regulatory requirements with respect to the sponsor,” she added.

“We do not expect a significant impact on the other infrastructure related fund companies due to this. However, given the overall challenges in the operating environment and slowdown, the investor interest in [the] infrastructure sector is likely to remain subdued,” Saggar said.

Last April, L&T IDF agreed to sell a stake of up to 25.1 percent to Apis Growth Fund II, a vehicle managed by the UK-based private equity firm which provides growth capital to financial services and financial infrastructure businesses in Asia and Africa. The investment, worth $110 million, was intended to strengthen L&T IDF’s capital structure and support the growth of L&T IDF’s loan book across various infrastructure sub-sectors in India, such as renewable energy, roads, power transmission, airports and ports, according to a joint statement issued at the time.

“This long-term partnership will support the L&T IDF in accessing low cost international sources of funds which will be utilised to refinance operational infrastructure projects in India,” L&T Finance Holdings noted in that statement.

Of the $110 million investment, 70 percent would have been in the form of growth capital for L&T IDF, while 30 percent was allocated for the purchase of shares from existing shareholders.

L&T IDF is classified as a non-banking financial company, a class of financial institutions created by the Indian government. It was founded in March 2013 to enable low cost, long-term debt refinancing to operational public-private partnership projects in the infrastructure sector.

As of 31 March 2019, L&T IDF’s assets under management stood at $1.3 billion.