US private equity major Kohlberg Kravis Roberts (KKR) has emerged as the front-runner to acquire a majority stake in infrastructure major Larsen & Toubro’s (L&T) subsidiary L&T Valves.

While the exact quantum of the stake to be offloaded was not immediately known, sources close to the development said the deal would hover around $500 million for a majority stake.

“KKR has already locked-in on L&T Valves, while a couple of investors and another private equity firm had also evinced interest in the stake. A few issues have to be ironed out, before the companies can make a formal announcement,” a source privy to the development told BusinessLine .

The sources, who declined to be identified prior as the discussions are in private, added L&T had the right to call off the deal in case another suitor comes up or the price does not meet its expectations.

The sources, however, did not provide a time-frame for the official announcement, restricting to “soon”, if everything goes well.

A KKR spokesperson said the company would not comment on the issue, while an L&T spokesperson also declined comment.

Earlier media reports had said that PE major Advent International was also in the fray, with the bidders evincing interest for the entire 100 per cent stake in L&T Valves.

L&T, as part of its policy to exit non-core business, was looking at selling stakes in L&T EWAC Alloys and L&T Valves and had earlier mandated Citigroup to scout for buyers.

It had put the stake sale of L&T Valves on the backburner as it wanted to focus on the initial public offering (IPO) of its IT subsidiary, L&T Infotech.

L&T’s wholly-owned subsidiary L&T Valves, which has manufacturing facilities in Chennai, Coimbatore and Kancheepuram, makes flow-control solutions for the oil & gas and power sectors.

In 2013, L&T had acquired a 50 per cent stake in Audco India from US-based Flowserve Corp to strengthen its valves business.

L&T Valves had posted revenues of ₹1,465 crore, with a ₹138- crore profit in the last financial year.

The company was also looking to sell its stake in another wholly-owned subsidiary, L&T EWAC Alloys, which is into maintenance and repair welding, and has a factory in Ankleshwar, Gujarat.

Its products and services include consumables, specification grade electronics and flux-cored welding wires.

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