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Investcorp to acquire IDFC Alternatives' PE, real estate fund businesses
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Global alternative investment manager Investcorp has acquired the private equity and real estate investment management businesses of IDFC Alternatives Ltd, a subsidiary of IDFC Ltd, the companies said in a statement. 

The deal was first reported by VCCircle in May last year. The transaction comes less than a year after IDFC Alternatives sold its infrastructure asset management business to US-based private equity firm Global Infrastructure Partners (GIP).

With the acquisition of IDFC Alternatives’ PE and realty business, Investcorp has forayed into the alternative investment space in India. The deal provides Investcorp with immediate access to the large and growing private equity and real estate markets in India, together with a team of seasoned professionals.

IDFC’s PE and realty fund businesses have assets under management of about $430 million.

“Our first direct investment into the Indian market is a major milestone for our business, which also marks our focused expansion into Asia,” said Mohammed Alardhi, executive chairman, Investcorp. “This acquisition will be instrumental in our plans to grow our investments into the country as part of our wider Asia strategy.”

“We are entering the Indian market at an important time in its growth trajectory,” said Rishi Kapoor, co-chief executive officer, Investcorp.  “Rising incomes, strong growth and stable policies including reforms like the national Goods and Services tax regime make India particularly attractive for investment.”

IDFC’s private equity business, led by Girish Nadkarni and Gaurav Sharma, has two active funds. The team focuses on investing in consumption-driven businesses within the healthcare, consumer products, financial services, food and agriculture, media and telecom sectors. The real estate business, led by Ritesh Vohra, also has two active funds. The funds provide structured senior credit within the residential real estate sector with a focus on projects in Mumbai, Bangalore, Hyderabad, Chennai and the National Capital Region.Investcorp was also in the race to clinch IDFC Alternatives’ infrastructure funds but lost out. 

Investcorp

Founded in 1982, Investcorp's principal client base is in the six countries of the Gulf Cooperation Council. It also has institutional clients in North America and Europe.

Since its inception, Investcorp has made about 175 corporate investments in the US, Europe, West Asia and North Africa, across a range of sectors including retail and consumer products, technology, business services and industrials.

Besides, Investcorp has more than 500 commercial and residential real estate investments in the US and Europe. It employs around 400 people in its offices in New York, London, Bahrain, Abu Dhabi, Doha, Riyadh and Singapore.

The firm has rapidly expanded in recent years, especially after Mohammed Alardhi took over as the executive chairman in 2015. Its high-profile acquisitions via its corporate investments unit in the past include luxury brands such as Tiffany & Co., Saks Fifth Avenue, Gucci and Breguet.

Investcorp's assets under management have doubled in a short span thanks to its 2016 acquisition of the UK-based 3i's $12 bllion debt management business. At the time, Alardhi had said that Investcorp hoped to increase its assets to $25 billion in the medium term.

IDFC Alternatives

The PE firm had emerged as one of the biggest homegrown alternative investment managers in the country largely due to its big infrastructure funds business.

Its PE franchise has invested over $1 billion across its three previous funds. Its debut fund-- India Development Fund (2004)--had a corpus of Rs 840 crore ($192 million then) and stands fully exited with a net internal rate of return (IRR) of 32%, according to its website.

IDFC Alternatives comes as a significant minority investor, but has inked a few control deals, too. The PE team has seen through 41 investments and 25 exits till April 2015, it claims. The PE funds had made a few infrastructure bets, too.

As of 2017, IDFC Alternatives had exited 36 out of 42 investments made from the first three funds.

In the realty fund segment, it became one of the earliest fund managers to pursue a strategy to acquire complete control of ready-to-move office assets with the acquisition of the 1.3 million square feet Galaxy IT Park in December 2011 and the 1.5 million sq ft BlueRidge SEZ in March 2013 at a combined enterprise value of Rs 900 crore. It sold the assets in late 2014 at a gross internal rate of return of 22%, according to its website.

In 2014, IDFC Alternatives had announced the final close of the IDFC Real Estate Yield Fund, a Rs 750-crore domestic fund focussed on the residential segment in India. Two years ago, IDFC Alternatives had raised Rs 760 crore under its IDFC Score Fund.

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