Milestone Capital Advisors Ltd, the homegrown alternate asset management fund, is re-negotiating with the public listed housing finance major, Dewan Housing Finance Ltd (DHFL), to sell off its bouquet of investment funds for close to Rs 220 crore($45 million), sources close to development have said.
According to a senior official with direct knowledge of the negotiations, “DHFL is the final contender for buying out Milestone Capital and it is going to shell out close to Rs 200- 220 crore.”
Earlier, Milestone was in talks with UK-based Ashmore Investment Managers but it walked out of the deal. After the fallout with Standard Chartered, the manager to the sale, Milestone re-approached DHFL to negotiate a possible buyout.
A senior executive from DHFL, who did not wish to be identified, said, “Milestone has, once again, approached us and we have just begun our due diligence. It will take another three weeks till we come up with an appropriate figure to put forth for the transaction. But we are actively working on it and more clarity is expected by next month.”
DHFL has a fund management company called ArthVeda Fund Management, which has invested in 13 real estate deals across Bangalore, Mumbai, Chennai, Hyderabad, Secunderabad, Cochin and other cities, with an asset allocation of nearly Rs 93 crore from its first fund. It has recently launched its mid-income housing investment fund and plans to launch seven real estate and infrastructure funds, including an offshore fund. It also aims to raise close to $2 billion in AUM. The company is set to close the first tranche of its ArthVeda Star Fund by March-end and expects to raise nearly Rs 100-140 crore for the same. Read here for more.
When contacted by VCCircle, a Milestone official said, “We are evaluating various strategic options with the initial list of bidders as per our process and are unable to confirm any particular bidder or any other detail, as of now. We will revert with details soon after we arrive at a decision.”
Market sources say that once DHFL gets access to Milestone Capital, it will be easier for the company to raise money. At present, Milestone independently runs two domestic schemes, MDS-I and MDS-II, with a committed corpus of Rs 230 crore and Rs 510 crore, respectively.
After the death of its founder Ved Prakash Arya in a freak accident last August, the investment firm has been able to raise a domestic real estate fund of Rs 400 crore. Milestone has 40 per cent stake in a joint venture with the country’s largest PE firm IL&FS Investment Managers Ltd for two real estate funds and a separate JV with financial services group Religare for private equity, putting its total asset valuation to a little less than $1 billion.
Milestone had inducted his wife Rubi Arya and his brother Ashwein Arya as board members in September last year.
At Rs 220 crore, the deal would translate into a valuation of around 4-5 per cent of total assets under management as per VCCircle estmates.
In contrast, IL&FS Investment Managers the largest domestic PE firm which is listed on the bourses, has a market cap of around $120 million translating into valuation of 3.8 per cent of assets under management.
A senior realty analyst from a domestic brokerage said, “As DHFL is looking to buy the assets of Milestone Capital, it will ease the process of raising the offshore fund as the company will be able to showcase returns from the existing asset that would be on paper.”
See Our Earlier Reports:
Milestone Cap Looks At Sellout/Merger By March
StanChart Veteran Advising Milestone Promoters On Possible Sale/Merger
Milestone Capital: What Next After Ved Prakash Arya?
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