L&T to acquire 21% stake in E2E Networks in two-part Rs 1,406 crore deal

The strategic investment helps expand the company's Cloud service offering as part of the data centre business

Engineering conglomerate Larsen & Toubro (L&T) on Tuesday announced it will acquire a 21 per cent stake in Indian Cloud and AI Cloud provider E2E Networks, in an all-cash transaction of Rs 1,406  crore.

 

The strategic investment, the company executives said, helps expand the company’s Cloud service offering as part of the data centre business.

 

In its BSE disclosure, L&T said E2E Networks specialises in providing CPU and GPU-based cloud computing platforms to help its customers carry out large scale general and AI-workloads by leveraging its relationship with Nvidia.

 

“The whole space has undergone a dramatic transformation…. in the last two to three years, emerging demand was for colocation, which evolved to cloud and now demand is emerging for GPU cloud,” said Hasit B Joshipura, advisor to chairman and managing director — data centre, cloud services & innovation fund, L&T in an interaction with Business Standard.

 

 

He added: “Therefore, if we were to offer the entire suite of services to our data centre clients, it makes sense for us to have a vanilla cloud offering as well as a GPU cloud in the time to come.”

 

In a two-part deal, L&T proposes to acquire a total of 4.17 million equity shares of E2E Networks or 21 per cent stake. Of this, 15 per cent stake would be an investment via preferential allotment for Rs 1,079.27 crore at Rs 3,622.25 per share, the company said. The remaining six per cent would be acquired from the founder for Rs 327.75 crore at Rs 2,750 per share.

 

The investment will sit under the data centre business, which L&T shows as part of its IT and TS division.

 

Giving details about the partnership, L&T said, under this alliance, L&T will integrate E2E Networks’ Cloud and AI Cloud platform with its expertise in data centre management and cloud solutions towards empowering startups, and enterprises.

 

Joshipura said the investment is in line with L&T’s envisaged growth engines. “One of the things that he (chairman statement) said is that the transformational businesses or the future growth engines are semiconductors, marketplaces and data centres."

 

L&T currently owns two data centres – Panvel (2MW) and Chennai (30 MW under development), which it offers to third-party customers.

 

The company is on the look-out for more data centres to own and operate. “We have plans in the foreseeable future for at least two more. We're currently looking at what the most optimal locations will be."

 

As part of its BSE disclosures, L&T also noted that post the acquisition, the company will also have the right to nominate up to two directors on the board of directors of E2E Networks and will also have certain rights and obligations in relation to transfer of equity shares of E2E Networks by its promoters Tarun Dua and Srishti Baweja.

 

Data centre play 

> L&T to make strategic investment in E2E Networks for GPU services

> It views data centre business as its growth engines

> The company owns two data centres, and is on the look out for more

> Latest investment aimed at empowering startups and enterprises