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IL&FS starts process to sell private equity, education units
Photo Credit: Reuters

Infrastructure Leasing and Financial Services Ltd (IL&FS) said on Thursday it is seeking bids to sell its private equity and education businesses, as it continues to divest assets to pay off its massive debts.

IL&FS said in a stock-exchange filing it plans to sell its stake in IL&FS Investment Managers Ltd along with all its associated fund management platforms as well as IL&FS Education & Technology Services Ltd.

The move comes just days after IL&FS kicked off a process to sell its road assets. The company is also selling units IL&FS Securities Services and ISSL Settlement & Transaction Services.

The infrastructure financier and developer is selling assets as part of a wider restructuring after the company and its units started defaulting on some of their debts in late August. The defaults triggered concerns about risk in the country’s financial system and led to the Indian government taking control of IL&FS in October. IL&FS and units owe about Rs 91,000 crore, including Rs 57,000 crore to state-run banks.

IL&FS said the alternative investment fund management business manages private equity funds and infrastructure debt funds. It has total assets under management of about Rs 13,340 crore.

IL&FS Investment Managers, or IL&FS PE, is the only publicly traded private equity fund manager in India. It invests across three asset classes, including real estate and infrastructure. It also has sector-agnostic growth funds.

IL&FS PE was, at one time, the largest homegrown PE firm in the country by assets under management. But it has lost way over the past decade. It had become the top PE fund manager in India by overtaking ICICI Venture after acquiring Saffron Asset Advisors, which advised a Euronext-listed real estate fund. However, as other PE firms raised large growth funds, it slipped in the pecking order by assets over the years.

Its last sector-agnostic fund managed to raise just $60 million in 2016, a fraction of its predecessor Tara India Fund III, under which the firm had raised $225 million in 2008.

IL&FS PE has also been exploring partnerships and had formed a joint venture with Andhra Pradesh government to act as a manager for urban infrastructure in the southern state as well as fund manager for the Andhra Pradesh Urban Development Fund. The APUDF was created to finance urban local bodies in the state.

IL&FS PE had also acquired IL&FS Infra Asset Management Ltd and associated entity IL&FS AMC Trustee Ltd from the parent two years ago. The two entities are the asset management unit and trustee for the infrastructure debt fund, which had a committed corpus of Rs 1,325 crore (around $200 million) then.

It was also eyeing a large infrastructure debt fund business and had inked a partnership with Saudi Arabia’s Islamic Corporation for the Development of the Private Sector (ICD). But the ICD halted plans for a $1 billion fund due to IL&FS’ troubles.

IL&FS PE is also bringing the curtains down on one of its key real estate investment vehicles. Yatra Capital Ltd, a Euronext-listed firm dedicated to making investments in the Indian real estate sector, is set to be wound up after completing exit formalities from its remaining bets. The development comes on the back of a poor show by the investment firm in almost all the bets it made in the country.

Yatra Capital’s investments are routed through a firm advised by IL&FS Investment Advisors LLC, an arm of IL&FS PE.

Last year, Archana Hingoirani had quit as the chief of IL&FS PE.

Meanwhile, IL&FS' education business provides ed-tech services to K-12 schools and students through its proprietary digital content, devices, platforms and solutions, as well as (in a joint initiative with National Skills Development Corporation) offers job-linked vocational skills programmes for the youth.

It also provides advisory and project management services to central and state governments and industries.

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