Yatra Capital may raise funds for infrastructure investments, to cease fresh realty deals in India

Yatra Capital Ltd, an India-focussed real estate investment firm that is advised by IL&FS Investment Advisors LLC (IIAL), is looking to create a new class of shares which will allow it to invest in infrastructure as an asset class in the country.

The decision was approved in an extraordinary general meeting a few days ago where it was also decided that the firm would not make any new real estate investments from its corpus though it may make follow-on investments in the existing assets. The shareholders also voted to change the investment management agreement with IIAL with respect to remuneration, including fees and a termination clause.

The Amsterdam-listed closed-ended real estate investment firm had proposed creation of the new class of shares to be issued to new investors seeking exposure to a portfolio of infrastructure assets in India, managed by IIAL. The firm said as of now its board and IIAL do not have any clarity on the timing of any future issue of these shares.

The firm is going to create the new shares if certain milestones are met. These include prohibition on the marketing and launch of the shares until distributions to Yatra Capital’s real estate shareholders amount to a return of capital of at least 50 per cent of the average market capitalisation of the existing Yatra Capital’s shares as measured over the five business days preceding May 6, 2013.

It also said such new shares will have no voting rights (including the right to vote on the appointment or removal of Yatra Capital’s directors) until 85 per cent of the company’s net asset value, as of March 31, 2013, has been realised and the proceeds returned to real estate shareholders.

This comes a year after IL&FS Investment Managers Ltd (IIML) announced in its investor call that it is planning to launch a fresh fund under its Yatra Capital platform.

Yatra Capital was promoted by Saffron Capital Advisors. Public listed PE firm IIML had acquired Saffron three years ago and now Yatra Capital is being managed by IIAL, a subsidiary of IIML.

Yatra Capital got listed on Euronext in December 2006 and raised €220 million in two rounds for investment in real estate assets in India. It has already deployed bulk of the proceeds.

Yatra Capital has also restructured its agreement with IIAL with the annual management fee being reduced from 2 per cent per annum of net capital commitments to 1.25 per cent per annum, calculated and payable every six months in advance. It has also modified the agreement with respect to carried interest for the investment manager.

(Edited by Joby Puthuparampil Johnson)

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