IL&FS Investment Managers Ltd (IIML), the listed private equity firm with $2.8 billion under management, has acquired the Mumbai-based private equity real estate firm Saffron Assets Advisors Pvt. Ltd. The deal would make Saffron Assets, which has $400 million under management, a subsidiary of IIML. The deal would make IIML the largest private equity fund management firms in India with $3.2 billion in assets like infrastructure and growth capital, besides real estate.
The deal also involves the merger of Mauritius units of Saffron and IIML. The deal would bring another two funds under management of IIML - Euronext-listed Yatra Capital Ltd and Saffron India Real Estate Fund I, which had an anchor investment of $75 million from UK's Standard
Saffron Assets earlier told VCCircle that it has shelved its earlier plans of raising niche funds targeting investments in hospitality, logistics and infrastructure. The firm had earlier announced that it would raise these sector-specific funds by 2010 and increase its assets under management to about $800 million. Till 2012, Saffron is looking at focusing on its portfolio, make new investments and also some exits.
IIML already has two real estate funds - $525 million IL&FS India Realty Fund I and $895 million IL&FS India Realty Fund II. It also has domestic real estate funds in JV with Milestone Capital and also recently closed a $658 million infrastructure fund in JV with Standard Chartered. It is also investing from $225 million growth capital fund called Tara India Fund III. Tara India Fund IV plans to start fundraising by end of this year, targeting $300-4000 million fund.
IIML has reported revenues of Rs 181 crore with a net profit Rs 74 crore for FY10. The income increased by 10% to Rs 164 crore and net profit by nearly 20% to Rs 62 crore in FY09.
The share price IIML closed at Rs 45.7 per share, up by 2.58% on the exchanges.
The deal would mark one of the first instances of consolidation in the Indian private equity industry. Earlier deals between private equity management firms have involved an overseas fund managers buying a domestically grown fund management company. These include US-based
Accel's acquisition of early stage VC firm Erasmic in 2008 and the 2006 acquisition by Sequoia Capital of Westbridge Capital Partners.
Another deal that is brewing is the sale of Axis Bank's private equity arm, which has reportedly attracted a number of suitors including IIML.