IL&FS eyes acquisitions to grow merchant banking

Inks pact with Chinese finance group for developing infra projects

Infrastructure Leasing and Financial Services (IL&FS) is looking to acquire merchant banking and broking outfits to increase capacity for providing capital market services, especially to infrastructure sector companies.

Ramesh Bawa, MD & CEO, IL&FS Financial Services Ltd (IFIN), said the group now wants to increase its presence for doing initial public offers and merchant banking activities, especially for companies in infrastructure and allied areas. Mergers and acquisitions (M&A) is one of the route to scale up its presence.

IL&FS had exited this space in 2008 by selling its stake in IL&FS Investsmart Ltd to HSBC. The UK banking giant had signed a pact to acquire 73.21 per cent of IL&FS Investsmart for around $241.6 million in May 2008, paving its entry into the retail brokerage arena.

The non-compete period after the pact with HSBC has come to an end, making the road clear for it to enter the space again (broking), said another IL&FS official.

Plans are also afoot for collaborating with international financial groups and expand its presence in this space. IL&FS's focus is not just in the domestic arena. IFIN's domestic presence is complemented by its foreign offices in London, Singapore, Hongkong and Dubai.

IL&FS group already has one merchant banking outfit - IL&FS Capital Advisors Limited (IL&FS Capital). It was granted registration certificate by the Securities and Exchange Board of India on June 1, 2012. IL&FS Capital, 100 per cent subsidiary of IFIN, has the mandate to provide a full spectrum of equity capital markets services, using an industry-focused and knowledge-driven approach. The aim is become an integrated financial services hub by leveraging the corporate, institutional and banking relationships across the group.

IFIN has posted a net profit of Rs 350 crore in 2012-13 (Rs 255 crore in 2011-12) with operating income of Rs 500 crore (Rs 450 crore in FY12). It did syndication of funds worth $ five billion in FY13.

IL&FS signed a pact with Hong Kong-based Industrial and Commercial Bank of China (Asia) Ltd for broad level cooperation in infrastructure project development services and related financing services.

Both the entities would collaborate for business across the north and east Asian regions and provide infrastructure project development services, including financial services, corporate banking, investment banking and treasury-related services and debt raising, Bawa said.

LOOKING FOR GROWTH

• IL&FS wants to increase its presence for doing initial public offers and merchant banking activities
• IL&FS Financial Services Ltd also has its presence in London, Singapore, Hongkong and Dubai