APAC: IL&FS appoints advisors to evaluate assets for sale

22 October 2018 - 12:00 am UTC

Debt-ridden Infrastructure Leasing & Finance Services (IL&FS) has appointed advisors to assist in its asset sale program.

The seven-member board of IL&FS, appointed by the federal government earlier this month, has selected Arpwood Capital Pvt and JM Financial Consultants Pvt as financial and transaction advisors to the IL&FS Group, the company said in a statement on Monday (22 October).

The board also confirmed the appointment of Alvarez & Marsal which will assist in “maintaining strict controls and on managing liquidity on a day-to-day basis at all levels,” the statement said.

Alvarez & Marsal, which was appointed by the superseded board last month to map the group’s debt restructuring strategy, will also evolve a resolution plan under the new board.

The appointments will “harmonize all asset monetization activities, including ongoing initiatives, and to undertake them in a transparent and speedy manner to optimize the interest of different stakeholders,” the statement said.

The advisors will evaluate all the assets to arrive at their fair value and prepare the list of assets that can be sold, a source said. Based on the recommendations the board will prepare the final list of assets that will be put on the block, he added.

Any talks with potential buyers that may have happened in the past are nullified and all discussions will now take place after the board’s approval, he explained.

According to separate media reports, I Squared Capital-backed Cube Highways, KKR, Italy’s Atlantia and OMERS Infrastructure Management have been in talks with IL&FS to acquire their assets.

Inframation has learned that Brookfield, Caisse de dépôt et placement du Québec (CDPQ), Canada Pension Plan Investment Board and Macquarie Group had also evinced interest in the road and renewable energy assets of IL&FS.

The first source cited above said IL&FS had been getting enquiries for their assets almost daily, but talks are still all at preliminary stages. Now, everything will start afresh with the board’s approval, he added.

This is a good move and will give the buyers and the seller a starting point for discussion and negotiations, a banker said. With the investigations and audit going on in IL&FS buyers were not sure how to value the assets, but now after this exercise hopefully there will be a lot more clarity, he added.

IL&FS, India’s largest private infrastructure financier and developer backed by Abu Dhabi Investment Authority (ADIA) and Japan’s Orix Corporation, had total liabilities of INR 1trn (USD 13.8bn) as of 31 March. It defaulted on various loan obligations since August.

IL&FS has the largest portfolio of PPP highway projects in India. It owns 28 build, operate and transfer road projects, including 25 operational with 11,000 lane kilometers.

The road portfolio includes, Chenani-Nashri Tunnelway (CNT) in Jammu & Kashmir, the longest road tunnel in India being built on annuity basis. It had also has the right for construction for Zojila Tunnel, which will be even bigger than CNT when completed.

IL&FS renewables portfolio consists of 860MW wind and solar projects.IL&FS runs two metro PPP projects in Gurgaon, near Delhi. Its other major PPP projects are – a finance center in Ahmedabad, Gujarat, a sports stadium in Kerala and a water treatment project in Tirupur, Tamil Nadu.

India’s biggest insurer Life Insurance Corporation of India owns a 25.3% stake in IL&FS. It next largest shareholders are Orix (23.5%); ADIA (12.56%), Housing Development Finance Corp (9%), Central Bank of India (7.67%) and State Bank of India (6.4%).

Brookfield, CDPQ, CPPIB and Macquarie didn’t respond to request for comments. IL&FS declined to comment beyond the statement.

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