MUMBAI: In the first such likely takeover by a global buyout major of a local fund, Global Infrastructure Partners (GIP) is close to acquiring IDFC Group’s private equity portfolio that has investments of around Rs 17,000 crore in Indian infrastructure companies, two people with direct knowledge of the development said.
“The top-level meeting held last week between the global management of GIP and IDFC’s management here in India paved the way for a carve-out of the IDFC PE fund from the parent IDFC Bank,” one of the two executives cited above said.
“The final contours and structure of the deal are being discussed and the current managers of the fund will continue to run the business,” said the second person. Emailed questionnaires to both GIP and IDFC did not elicit any response until the publication of this report. GIP is a leading global infrastructure investor that manages more than $40 billion.
GIP’s current equity fund, Global Infrastructure Partners III, makes equity investments in high-quality infrastructure assets in the energy, transport and water and waste-management industries. The companies in GIP’s portfolio have combined annual revenues exceeding $5 billion and employ approximately 21,000 people, its Web site says.
IDFC Ltd, which owns India’s newest lender IDFC Bank, had identified private equity as non-core and was looking to exit by selling the portfolio under IDFC Alternatives that manages assets worth Rs 17,000 crore ($2.6 billion). These are across three asset classes – infrastructure, real estate and plain vanilla private equity investments. Its existing portfolio includes road developers such as Ashoka Highways and Gayatri Projects, energy companies such as GMR, Adhunik Power and ONGC Tripura Power Company, and consumer companies such as Parag Milk Foods.
“Although IDFC is no more bullish on the PE investing business, the current management of the fund believes that there is a lot of scope in it. The GIP-backed buyout will help them continue with the investing business, while giving GIP direct exposure to Indian infrastructure investing,” said another person with direct knowledge of the development.
Last fortnight, GIP, Canada’s Public Sector Pension Investment Board (PSP Investments), and China’s CIC Capital Corp agreed to purchase Equis Energy for $5 billion. The sale included liabilities of $1.3 billion and the Indian portfolio of the Singaporebased renewable energy developer, comprising green energy platforms Energon and Energon Soleq.