MUMBAI: Engineering major L&T is in discussions with Japanese conglomerates to sell stake in its fully owned subsidiary, L&T Infotech, two people with knowledge of the development said. The firm is in discussions with firms such as Hitachi, Mitsubishi and Fujitsu, and negotiations with at least one Japanese player have progressed to a fairly advanced stage, they said.
The group is keeping the talks very hushed because it does not want the deal to come a cropper and fall through like the proposed sale of its electrical business, said one of the people, adding that L&T chairman and MD, AM Naik, had made a quiet trip to Japan about two weeks back. The Japanese player in the lead to acquire the firm could be Hitachi, the second person said.
An e-mail sent to L&T did not receive a response till the time of writing. However, ET has learnt that L&T Infotech had sent out a communication to employees on Friday asking them to ignore any reports of a potential sale, terming them as rumours.
The sale of the infotech business could fetch L&T anything between $700 million -1 billion as compared to the $3 billion the electrical business was expected to fetch, bankers said. The sale of L&T's electrical business was close to being finalised with US-based industrial firm, Eaton. However, opposition from employee unions and financial institutions, which hold over 30% stake in L&T, scuttled the deal.
At this point, only Japanese companies are learnt to be in the fray for the IT subsidiary. Japanese players, while known to be sticklers taking several months to close a deal, are also perceived to pay a larger premium.
"There is also a possibility of a quid pro quo if the company is partnering with L&T on any of its other businesses," the person added.
Japanese companies have been looking for software buys in India for some years now, and most of their names, excepting Mitsubishi, have figured in deal discusssions at some point. But sources said like most large diversified Japanese conglomerates Mitsubishi had interests in almost every business.
The group is keeping the talks very hushed because it does not want the deal to come a cropper and fall through like the proposed sale of its electrical business, said one of the people, adding that L&T chairman and MD, AM Naik, had made a quiet trip to Japan about two weeks back. The Japanese player in the lead to acquire the firm could be Hitachi, the second person said.
An e-mail sent to L&T did not receive a response till the time of writing. However, ET has learnt that L&T Infotech had sent out a communication to employees on Friday asking them to ignore any reports of a potential sale, terming them as rumours.
The sale of the infotech business could fetch L&T anything between $700 million -1 billion as compared to the $3 billion the electrical business was expected to fetch, bankers said. The sale of L&T's electrical business was close to being finalised with US-based industrial firm, Eaton. However, opposition from employee unions and financial institutions, which hold over 30% stake in L&T, scuttled the deal.
At this point, only Japanese companies are learnt to be in the fray for the IT subsidiary. Japanese players, while known to be sticklers taking several months to close a deal, are also perceived to pay a larger premium.
"There is also a possibility of a quid pro quo if the company is partnering with L&T on any of its other businesses," the person added.
Japanese companies have been looking for software buys in India for some years now, and most of their names, excepting Mitsubishi, have figured in deal discusssions at some point. But sources said like most large diversified Japanese conglomerates Mitsubishi had interests in almost every business.
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