December 2008
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PE funds turn their back on new infrastructure projects

Debt funding for new infrastructure projects is facing bottlenecks with private equity (PE) funds exiting from investment commitments. Banking sources said that only the existing pipeline sanctions were being disbursed. However, banks are not prepared to release debt funds to some planned power projects, including ultra mega power projects. This is because promoters have relied substantially on PE funds. PE funds, in the past, had resorted to using leveraged buyouts. This implied using borrowed funds for acquiring equity stakes in new projects. PE funds had committed equity funding in some projects up to 49 per cent. […]

IL&FS private equity arm scales down ambition, mops up $225 mn

IL&FS Investment Managers (IIML), the private equity subsidiary of infrastructure financing major IL&FS, has closed its $225-million growth equity fund. In mid-2007, IIML had effected the first closure at $150 million and it brought about the final closure at $225 million recently. Industry sources said IL&FS Investment Managers were planning to raise a $400-million fund, but had to close it at $225 million, given the current market conditions. IIML is among the earliest venture capital and private equity players in India and, during the course of the last 14 years, it has raised and managed nine funds, ranging from sector-specific funds like real estate to sector-agnostic private equity funds. It currently manages and advises investments in excess of $2 billion across all sectors. […]

Cos eye PE funds as traditional sources dry up

With traditional sources of finance in short supply, most Indian companies, including leading corporate houses, are turning to private equity to raise capital. Private equity is looking more attractive as factors like the ongoing credit crunch, tighter lending norms imposed by banks and slowing demand have forced companies to prioritise their capex plans. According to a cross-section of big ticket PE firms ET spoke to, PE investments could gross $10-12 billion in the next financial year. While this may be less than the previous year, it is a substantial amount in the middle of a global downturn. Investments would start flowing once promoters begin to align valuation expectations to the corrections in the market, officials at a number of PE firms said. […]