Torrent Power is said in talks to buy L&T's power unit for $1 billion

Torrent Power Ltd. is in talks to buy the thermal business unit of Larsen & Toubro Ltd. for about $1 billion including debt, according to people with knowledge of the matter.

Both companies are working with advisers on the potential transaction, the people said, asking not to be identified because the deliberations are private. A disposal would help L&T raise cash to reduce its debt, the people said.

Deliberations are ongoing and details of the potential transaction may change, the people said, adding that talks could also fall apart and other bidders might emerge.

A representative for L&T declined to comment, while Torrent Power didn’t immediately respond to a request seeking comment.

L&T has been evaluating selling its thermal unit to focus on its core engineering and construction business. The company held talks in 2021 to merge the asset with the Indian arm of Singapore-based Sembcorp Industries Ltd., Bloomberg News reported at the time.

Torrent Power, owned by Ahmedabad-based conglomerate Torrent Group, offers services including power generation, transmission, distribution, as well as manufacturing and supply of power cables, according to its website.

Shares of Torrent Power have dropped around 9% in Mumbai this year, giving the company a market value of nearly $8 billion.