APAC: GIP agrees to buy IDFC’s infra business

30 April 2018 - 12:00 am UTC

IDFC Alternatives has entered into a definitive agreement to sell its infrastructure asset management business to Global Infrastructure Partners (GIP).

The sale will conclude after receiving the requisite regulatory approvals, the Indian private equity group’s parent IDFC Ltd said in an exchange filing on Saturday (28 April).

IDFC’s infrastructure team and support staff will be transferred to GIP, a spokesperson for IDFC told Inframation. She declined to disclose the value of the deal.

IDFC manages the India Infrastructure Fund (IIF) I and IIF II.

IIF I raised INR 38bn (USD 569.5m) at final close and has exited eleven of the 17 assets it held when it was fully invested.

IIF II reached a INR 55bn final close in 2014. The fund was recently fully deployed and holds 15 assets.

Additionally, IDFC has been in discussions with investors to raise a third fund which will now be raised under the GIP banner, the IDFC spokesperson clarified.

“It’s a win-win for both and signifies that consolidation is going to be the way forward in the Indian infrastructure space,” said Sandeep Upadhyay, CEO of Centrum Infrastructure Advisory.

“From GIP’s perspective they are getting the management team to run these assets, which is a big positive,” Upadhyay said. “The managers have the experience and can handle the nuances of managing an infrastructure asset in India,” he added.

A banker familiar with the deal also observed that GIP has acquired an experienced management team and platforms for various verticals to deploy further funds. He observed the IDFC infrastructure assets are a good fit for GIP.

In October, IDFC Alternatives’ CEO M. K. Sinha had told Inframation that the manager would either exit IIF II vertical-by-vertical or sell the whole fund to a global investor. IDFC had exited IIF I asset-by-asset.

Combined IIF I and II had invested in 32 infrastructure companies across roads, power, telecom tower and clean energy sectors.

“Now that IDFC has nurtured these assets, it is being passed on to more mature investors who can handle these assets better,” Upadhyay said.

“These assets are mature and have stable cashflows which give comfort to a long-term global investors,” he observed.

In January, New York-based GIP and its co-investors completed the acquisition of Equis’ Asian renewable power business for an enterprise value of USD 5bn.

IDFC Alternatives manages INR 177bn across four private equity funds, two infrastructure funds and three real estate funds.

The group has decided to exit all businesses apart from banking according to a senior IDFC executive.​​​​​​