KKR mulls buying out road assets of Indian shadow lender IL&FS

Photographer: Prashanth Vishwanathan/Bloomberg

Private equity firm KKR & Co., which completed raising a $7.4 billion infrastructure fund last month, is evaluating infrastructure sector buyouts in India, two people aware of the development said. The fund is building an infrastructure team in the country, and is eyeing some of the road assets of beleaguered IL&FS Transportation Networks Ltd (ITNL), the people cited above said on condition of anonymity.

For its India infrastructure business, KKR has hired Hardik Shah from investment management firm Brookfield Asset Management, where he was responsible for sourcing and executing infrastructure deals. Earlier, he worked with Macquarie Infrastructure and Real Assets (MIRA), one of the world’s largest infrastructure asset managers. Both Shah and a KKR spokesperson declined to comment.

“KKR has recently closed its infrastructure fund. The firm will be looking at deploying a large chunk of the sum raised in India. Of the $7.4 billion, we can expect at least $1 billion to be invested in India. Hardik Shah has been hired for building the infrastructure portfolio in India,” the first of the two people cited above said.

In September, KKR said it has raised $7.4 billion for its third global infrastructure fund, more than double of $3.1 billion it raised for its second infrastructure fund. Although the fund is focused on countries that are part of Organisation for Economic Co-operation and Development (OECD), India will also be an important geography, the person added.

While KKR invests in India through its Asia-focused private equity fund, for infrastructure investments, the firm has raised only global funds so far. It could not be ascertained immediately if the firm is in the process of raising an Asia-focused fund for infrastructure as well.

Meanwhile, the PE firm is evaluating investment opportunities in some of the operational road assets of ITNL. Debt-stricken Infrastructure Leasing and Financial Services (IL&FS), the parent of ITNL, has been looking to monetize its build-operate-transfer road assets as part of its deleveraging plan. Both IL&FS and its road developing subsidiary ITNL have defaulted on multiple debt obligations since June 2018.

IL&FS has a total debt of around ₹91,000 crore.

In the first week of October, the government named a new board at IL&FS with Uday Kotak as non-executive chairman and Vineet Nayyar as vice-chairman and managing director. “While the new board just taken over and a fresh audit has been called for, there could be further delay in asset monetization. KKR, however, has evaluated some of the road assets recently,” the second person cited above said.

KKR has already started testing the waters in India’s infrastructure sector. In August, it announced acquisition of 60% stake in environmental solutions provider Ramky Enviro Engineers Ltd for $530 million. The acquisition of Ramky Enviro by KKR is the largest buyout by a PE firm in India’s environmental services sector so far. As on 30 June, KKR’s total assets under management stood at $191.3 billion.

This article was first published on livemint.com

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.