KKR eyes investment in IL&FS road assets

Global 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, 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 to 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 persons mentioned 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, India will also be an important geography, the first 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. Debtstricken Infrastructure Leasing and Financial Services, 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 Rs 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 said.

KKR has already started testing waters in India’s infrastructure sector. In August, it announced acquisition of 60% stake in environmental solution provider Ramky Enviro Engineers Ltd for $530 million from Hyderabad-based infrastructure firm Ramky Group.