L&T Technology Services has filed draft red herring prospectus (DRHP) with SEBI to tap the IPO market. The upcoming IPO of L&T Technology Services – a fully owned subsidiary of construction and infrastructure conglomerate Larsen & Toubro (L&T) – will be completely an offer for sale (OFS) by its parent. The IPO will be managed by Kotak Mahindra Bank, Bank of America Merrill Lynch, JM Financial, and SBI Capital Markets.
Through L&T Technology Services IPO, L&T plans to sell 10,400,000 shares, roughly translating to 10.2% equity shares of its engineering R&D arm. As a result, L&T Technology Services will not be getting any funds from the IPO.
Till January 2014, L&T Technology Services was structured within the parent L&T under the integrated engineering services business and partly as a segment under the other subsidiary, L&T Infotech which has recently concluded its IPO successfully. Following an internal restructuring, L&T transferred its product engineering services and integrated engineering businesses to form L&T Technology Services.
Headed by Dr. Keshab Panda, L&T Technology Services 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.
L&T Technology Services IPO to unlock value
L&T Technology Services 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. In earlier interviews, L&T Chairman AM Naik had indicated to list L&T Technology Services by July 2016, followed by L&T Transmission & Distribution and L&T Hyrdrocarbons in the next two years.
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After heading the engineering conglomerate for more than a decade, Naik plans to retire in 2017.