L&T Finance and Holdings IPO priced at Rs51-59 a share
22 July 2011
Engineering and construction major, Larsen & Toubro (L&T) yesterday announced the initial public offer (IPO) of L&T Finance Holdings at Rs51-59 a share.
According to analysts this marks a spin out of the behemoth's finance arm. They say such cases mostly result in value unlocking in the case of the new entity.
Analysts are also seeing parallels with Reliance Industries, a company that had attempted a take over of L&T in the 1980s under Dhirubhai Ambani.
After senior Ambani passed away, sons Anil and Mukesh split up their empire in 2006 when the total market capitalisation of the group was Rs1.58 lakh crore. With the listings, spin offs and the value unlocking that followed, the capitalisation of the two groups to increase to Rs3.64 lakh crore today.
Besides the potential for value-unlocking, L&T's listings are said to be also driven by the fact that the company is becoming unwieldy, according to analysts. With 10 operating divisions, including engineering, ship-building, information technology, power and railway projects, the company is getting too big to handle and also difficult to value some analysts say.
The first of the issues is to open from 27July to 29 July, with the main anchor investors due to come in on 26 July.