Torrent Energy is reportedly in discussions to accumulate Larsen & Toubro’s (LTOUF) thermal energy enterprise in a possible $1 billion deal, together with debt. In line with sources conversant in the matter, each side are working with advisers, however the construction continues to be taking form. For L&T, this transfer may help its effort to streamline operations and redirect capital towards its core engineering and development enterprise. For Torrent, it might open up a brand new chapter of growth in typical energy, including scale to an already numerous power portfolio.
L&T has been exploring a sale of the unit for years, together with earlier talks with Sembcorp Industries’ India arm in 2021. Whereas no deal materialized then, the present discussions counsel renewed urgency. Torrent Energy, a part of the Ahmedabad-based Torrent Group, is already energetic throughout era, transmission, distribution, and cable manufacturing. A thermal asset of this dimension may probably give it extra working leverage and steadiness throughout era typeseven as India’s power combine continues shifting towards renewables.
Nonetheless, nothing is locked in. Sources stated talks stay ongoing, with the potential of phrases altering or new bidders getting into the fray. L&T declined to remark, and Torrent hasn’t but responded. Shares of Torrent Energy are down about 9% year-to-date, placing its market cap round $8 billionan fascinating backdrop because it considers a daring wager in a maturing power section.
This text first appeared on GuruFocus.
