IL&FS PE arm mulls sector-specific funds

Roads, logistics are priority sectors

IL&FS Investment Managers Ltd, private equity (PE) arm of the IL&FS group, might set up segment-specific infrastructure funds.

Archana Hingorani, chief executive and executive director, said: “We will be doing two or three categories of funds. The plans are not firmed up. We will do demand analysis before taking a decision.” Adding, she said, “There is a large opportunity in roads, power, ports, waste and logistics (sectors).” In the logistics space, the focus is on supporting companies that build infrastructure. Fund raising is difficult; headlines about the Indian economy and environment make an impact on prospective investors. Still, there is interest. It is deepest in infrastructure. They (foreign investors in PE) are looking for long-term returns.”

Deterioration in the business environment and in policy decisions hit the flow of money in the PE space in 2012. She said the new policies announced and attempts to address issues such as fiscal deficit had created interest again in the Indian market. So, 2013-14 should be better in terms of fund raising, though there are issues such as elections.

On performance in 2012-13, she said the firm invested Rs 772 crore from infrastructure and real estate funds during 2012-13. Consolidated revenue for FY13 was Rs 226.9 crore, marginally up from last year’s Rs 224.7 crore. Assets under management in various funds were $2.2 billion at the end of March.

The environment for exits from investments has been challenging. She said the exit cycle had got stretched. There has been regulatory uncertainty, with new rules coming into play. Revenues have been stable because of favourable currency movements. “Since a large part of revenues are dollar-denominated, we have been able to take advantage of the volatility,” she said.

The economic rough patch and policy problems have had adverse impact on investments by PE firms. Turning cautious, they became more exacting in investment decisions. If there is potential for Rs 130 crore investment, PE commitment will be done for Rs 100 crore, she said.