The country’s largest home-grown private equity firm IL&FS Investment Managers Ltd (IIML) has reported a reasonable revenue growth, partly boosted by the acquisition of Saffron Advisors (completed in Q3 last year), but a sharp rise in operational expenses shrank its net profit marginally for the first quarter ended June 30, 2011, over the year-ago period.

The listed PE firm, with assets of $3.2 billion under management, has reported 23 per cent increase in consolidated revenues to Rs 53.1 crore for the quarter, compared to Q1 FY11, while its net profit declined 3 per cent to Rs 17.21 crore. On a sequential basis, the company’s consolidated revenue declined 3 per cent while the net profit shrunk 5 per cent over Q4 FY11.

The firm’s expenses were particularly hit by a tenfold jump in advisory fees (Y-o-Y), besides almost 100 per cent rise in legal and professional fees. Employee cost was just a notch above the revenue growth.

In a release, IL&FS PE said that it invested Rs 137.5 crore across three private equity deals during the quarter and is also in advanced stages of closing a real estae deal. It also made three partial exits in the real estate while closing one complete exit in the PE space.

IIML scrip was up 0.3 per cent at mid-day trade on the Bombay Stock Exchange, after its results announcement in a weak Mumbai market. At the latest quoted price, the company is valued at Rs 670 crore or about 4.7 per cent of the AUM (based on last disclosed numbers).

At the AGM today, shareholders of the firm also approved re-appointment of Arun Saha and Vibhav Kapoor as directors and Archana Hingorani as a whole time director (designated as CEO & executive director) of the company, besides the appointments of Jitender Balakrishnan, Ramesh Bawa (MD & CEO of IL&FS Financial Services) and Siddharth Mehta, also as directors.

At the end of Q3, the company said that its revenue had been boosted by the increase in AUM, even as amortisation related to the acquisition last year did affect its profits. However, this is the second quarter with a decline in sequential revenues, which can be a worrying sign for the firm, as also the rising cost of operations.

"The fund raising environment remains challenging in light of domestic headwinds and global economic uncertainty. However our strong track record and market standing continues to hold us in good stead for raising long term institutional capital, as investors become more discerning and time lines for making commitments get extended. We have a pipeline of new Funds to be raised which will be a large focus for the Company this fiscal. The remaining fiscal should see most of our funds fully invested. The exit environment is muted as the equity markets continue to be volatile. However, the firm's continued focus on this has yielded early results, with four exits achieved in this quarter," said Archana Hingorani, Chief Executive Officer, IL&FS Investment Managers.

Last August, IIML had acquired the Mumbai-based private equity real estate firm Saffron Assets Advisors Pvt Ltd, which brought an additional $400 million asset under IIML, making it the largest PE fund management firm in India, with assets like infrastructure and growth capital, besides real estate.

Some of the representative transactions of IIML include Shoppers Stop, Gujarat Pipavav Port, IBN18 Broadcast, Godrej Beverage & Foods, SpiceJet, ABG Shipyard, Tejas Networks, Bharat Serums & Vaccines, IndiaGames, DQ Entertainment, Ramky Infrastructure, Den Networks, DB Realty, ElectroSteel Integrated, Orbit Highcity and QVC Realty.

See Our Earlier Reports:

IL&FS Investment Managers Q3 Net Flat; Sees 7 Portfolio Exits


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