L&T Technology Services IPO application has been cleared by India’s capital market regulator SEBI. The regulator issued its observation regarding the upcoming IPO on 24 August, notes on its website indicate. The company, a fully owned subsidiary of engineering major Larsen & Toubro (L&T), filed draft prospectus for the IPO on 15 July. The timeframe of only 40 days in getting regulatory clearances makes L&T Technology IPO one of the fastest turnarounds this year, along with L&T Infotech and Dilip Buildcon. The approval has taken India’s IPO pipeline to 15 companies again.
Like the recently concluded IPO of L&T Infotech, the upcoming IPO of engineering R&D arm will be completely an offer for sale (OFS) by the parent organization. The IPO, involving sale of 10,400,000 shares, will be managed by Kotak Mahindra Bank, Bank of America Merrill Lynch, JM Financial, and SBI Capital Markets. Although the company has not yet set a price for the shares to be offered, street insiders indicate the IPO is likely to be priced to raise anywhere around INR800 – 1,000 crore (INR8-10 billion).
New identity before IPO
L&T Technology Services acquired its new name in 2014 after the business was carved out of L&T Integrated Engineering Services. Some parts of L&T Technology Services were also housed under L&T Infotech before the engineering R&D arm was molded into a separate company. L&T Technology Services also offers engineering analytics, Internet of Things and automation solutions.
The business, headed by Dr. Keshab Panda, employs 10,000 highly skilled professionals with operations at 35 locations, including 12 global delivery centers, around the globe. L&T Technology Services earned revenue of INR31.42 billion (INR3,142.7 crore) and posted a profit after tax (PAT) of INR4.16 billion (INR416.6 crore) in FY2016.
Value unlock but Infotech IPO bad experience
L&T Technology IPO is part of L&T’s strategy to unlock value by listing or selling some of the businesses. The engineering major also plans to list L&T Transmission & Distribution and L&T Hyrdrocarbons in the coming years. Since L&T Technology IPO is from L&T stable, it will be closely watched, although poor show of L&T Infotech on listing and in subsequent days has shaken the confidence of investors.