L&T bags RBI, MoF nod to float AMC in Mauritius

Anindita Dey

Mumbai, June 11: Larsen and Toubro (L&T) has received permission from the Reserve Bank of India (RBI) and the ministry of finance (MoF) to float an asset management company in Mauritius. This is in line with the company strategy to focus on project exports and overseas investments in infrastructure.

According to company officials, this is an innovative way of restructuring overseas investments which is primarily aimed at focusing on investments in infrastructure, specifically power.

The company will act as a special purpose vehicle (SPV) for L&T to attract investments from foreign and multinational investors, Indian investors, venture capital funds to act as co-investors in infrastructure projects floated by it abroad.

This is because investments in infrastructure projects being sizable in nature, L&T alone cannot pool in the entire funds and therefore, needs external investors to invest in overseas projects wherein it will pick up stake, said sources.

Another advantage with this kind of an arrangement will be that the foreign investors can easily get an exit route for their funds as the SPV is located abroad and the investments by these foreign investors are
routed through L&T and not directly, which minimises the regulatory bottlenecks for these foreign investors in investing in such projects.

In other words, this SPV will act as a conduit for attracting foreign direct investments in India through various channels as the investments will be through L&T.

Although the investments in the SPV have not been decided yet, the initial investments are understood to be around $35 million-$40 million to start the SPV.

At present, L&T has taken up projects in Oman and Sri Lanka and is looking at new projects in the Far East and Middle East and other neighbouring countries. In the long run, it plans to look into projects in the US as well, said officials.

Earlier, the engineering major had already started exploring business opportunities in Saudi Arabia following the trade enquiries received from there by the Confederation of Indian Industry in the area of iron and steel, petrochemicals, oil exploration and supply of gas related services, feed and fertiliser, organic farming and recycling of waste products.