Yatra Capital Ltd, a Euronext-listed firm dedicated to make investments in the Indian real estate space, is now pursuing an alternative plan to create a new pool of capital to invest in real estate and infrastructure sectors in the country, it has disclosed.
The firm’s previous proposal to create a new class of shares to make fresh investments in India was voted down by its shareholders last month over ‘risk of contagion of liabilities across different share classes of the company’. The proposal to create a new class of shares for fundraise was floated in January and the securities were supposed to be listed on the London Stock Exchange. The company had also given the option to existing shareholders of the firm to convert all or part of their holdings into the new class of shares.
Yatra Capital is now setting up two subsidiaries which will be soon sold to IL&FS PE, the investment manager of the company.
IL&FS PE will in turn raise fresh capital for investment in real estate and infrastructure in India.
“The creation of subsidiaries and their transfer to IIAL (a part of IL&FS PE) will not affect the orderly wind-down of the existing share class of the company,” the firm said. However, it has retained the option to issue additional shares to raise funds for investment in infrastructure in the future.
Yatra Capital will not hold any shares or other interest in the companies after sale to IL&FS PE.
It is not clear how this serves the purpose of the fundraise for the company. Attempts to reach out to IL&FS PE to understand what it means for the company through email and calls did not elicit any response. An email sent to Yatra Capital also did not elicit any response.
From the fresh pool of capital, it was looking to invest in residential real estate projects and intended to deploy 75 per cent of the capital through structured instruments with a target gross yield of 12 per cent annually and an overall IRR of 22 per cent annually in rupee terms. Rest of the money was to go for equity or equity related transactions with the aim of achieving an overall return of 24 per cent annually at the investment level in rupee terms.
In January this year, it had also proposed addition of infrastructure in the investment mandate of the company.
Yatra Capital came under IL&FS PE’s fold after the Indian PE firm acquired Saffron Asset Advisors, the investment manager of Yatra Capital, in 2010.
From the money it raised through its public listing, it has so far committed €162 million of the net funds in 13 projects level and two entity level investments, with development potential of over 15.90 million square feet, across nine cities and five sectors. Many of these were made during the bull-run and have clocked a series of back-to-back exits, almost all with losses in the last one year.
(Edited by Joby Puthuparampil Johnson)