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IL&FS PE raises new sector agnostic fund

15 November, 2016

IL&FS Investment Managers Ltd or IL&FS PE, one of the country’s largest home-grown private equity firms in terms of assets under management (AUM), said on Monday it has completed the fundraising process for its new sector-agnostic growth fund almost two years after hitting first close.

Although sector agnostic, it would chase deals in healthcare and life sciences, education and skill development, clean energy, financial inclusion, food and agriculture, water, urban infrastructure and connectivity services.

The new fund, christened Tara India Fund IV, garnered $60 million (Rs 406 crore), a fraction of its predecessor Tara India Fund III under which the firm had raised $225 million in 2008.

It had previously not publicly disclosed how much it was aiming to raise under the new growth equity fund but earlier separate media reports had pegged the size to be around $300-400 million. However, in an analyst call three years ago the firm had said it is eyeing a modest $75 million in this fund.

The PE firm, the only publicly traded private equity fund manager in India, had made the first close of the fund at $40 million in February last year.

IL&FS PE invests across three asset classes, including real estate and infrastructure besides the sector agnostic growth funds.

It had become the top PE fund manager in India by AUM overtaking ICICI Venture after acquiring Saffron Asset Advisors, which advised a Euronext-listed realty fund. But as other PE firms raised large growth funds, it slipped in the pecking order by assets over the last few years.

ICICI Venture, another legacy PE firm that had lost the pole position to IL&FS PE, has managed to strike big joint funds and has once again emerged as the biggest home-grown PE firm.

Andhra Pradesh Urban Development Fund, debt fund

IL&FS PE has also been exploring such joint funds and in a parallel development said on Monday that it has formed with 51:49 joint venture with Andhra Pradesh government. The PE firm will own a majority stake in Andhra Pradesh Urban Infrastructure Asset Management Ltd with an initial investment of Rs 10.2 crore.

This firm has been formed to act as a manager for urban infrastructure in the southern state of Andhra Pradesh as well as fund manager for the Andhra Pradesh Urban Development Fund (APUDF). APUDF will be created to finance the urban local bodies in the state. The JV will also be involved in integrated urban infrastructure project development and programme management for the urban local bodies.

This JV firm will help the state government set up, institutionalise and manage APUDF by mobilising resources from different sources like banks and financial institutions, including private sector arms of multilateral and bilateral agencies and by leveraging government and other financial assistances. These funds would be deployed in the urban areas on various infrastructure projects, including public private partnership (PPP) projects.

The PE firm also disclosed that it has received approval from the capital markets regulator Securities and Exchange Board of India (SEBI) to buy the infrastructure debt fund business of parent IL&FS Financial Services Ltd.

IL&FS PE had said in August 2015 that it would buy shares of IL&FS Infra Asset Management Ltd and associated entity IL&FS AMC Trustee Ltd from the parent. The two entities are the asset management unit and trustee for the infrastructure debt fund, which has a committed corpus of Rs 1,325 crore (around $200 million).

The PE firm would pay Rs 21 crore for an 86.61% stake in IL&FS Infra and full ownership of IL&FS AMC Trustee, it had said earlier.

In July last year, the company had said it was expanding its business mandate beyond pure equity-driven private equity funding to include debt funds and what it called ‘investment banking-led private equity transactions for stressed assets’.

It is also the investment manager for an infrastructure investment trust floated by group firm IL&FS Transportation Network Ltd. IL&FS Transportation Network has set up IL&FS Transportation Investment Trust, which has received in principle approval from SEBI for registration as an infrastructure investment trust.

While some like Everstone, India Value Fund Advisors and Multiples raised large funds over the last 18 months, many other India-focused PE firms are on the road to raise new sector agnostic funds. These include names like ChrysCapital, CX Partners and MCap, among others.

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IL&FS PE raises new sector agnostic fund

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