This is one heck of a deal! Piramal Enterprises is merging with IL&FS to create Rs 15,000 crore entity!

If everything goes as planned, Piramal Enterprises (PEL) is going to carve out its financial services and merge it with India’s largest unlisted infrastructure developer and financier, Infrastructure Leasing & Financial Services (IL&FS) in an all stock deal.

PEL is on the verge of taking control of IL&FS and the deal would create an entity with a net worth of Rs 20,000 crore and leverage ratio of 1:3.

IL&FS has about Rs 18,000 crore of assets under management. If the deal is sealed, Ajay Piramal will be the largest shareholder and promoter of the merged company and a formidable force in infrastructure development and finance.

ET reported the merger will give Piramal a string of 10 infrastructure utilities including a ready-to-start 600 mw power plant in Cuddalore that can be expanded to 3,600 mw, India's largest wind energy company generating 1,000 mw and 30 operational toll road projects.

Financial services contribute 18% to PEL's revenues of Rs 5,123 crore as of March 31, 2015.

Piramal has been investing in financial services after he sold his money-spinning formulations business to Abbott for Rs 17,484 crore in 2010.

Experts say that such deals will continue in both financial services and infrastructure to enable better net worth in operating companies.

Consultants added that such consolidation would be driven by shortage of capital, inability to scale up and lack of promoters.

(Image: Thinkstock)