IL&FS Partners Lone Star to Invest in Stressed Infra Assets
Fund will assist banks, PE investors and asset reconstruction cos to recycle capital
Mumbai: Infrastructure investment company IL&FS has joined hands with global private equity firm Lone Star Funds to form a stressed assets fund that will buy bad loans from Indian banks. The fund will have a capital pool of $550 million, which could lead to asset purchases of up to $2.5 billion, the companies said in a joint statement on Sunday.
The fund will assist banks, private equity investors and asset reconstruction companies to recycle capital, thus permitting reinvestment capital in fresh projects.
Founded in 1995, Lone Star in- vests globally in operating companies, real estate, equity, credit and other financial assets. It invests on behalf of its partners, which include pension funds as well as foundations and endowments that support medical research, higher education and other philanthropic causes. It has raised $70 billion globally so far and has closed more than 1,350 transactions with an aggregate purchase price of $180 billion (including acquisition financing and co-inves- tors), the company release said.
IL&FS has built a portfolio of infrastructure projects aggregating $25 billion.
“Lone Star looks forward to collaborating with IL&FS in reviving Indian infrastructure assets and benefitting from IL&FS’s long track record as a successful developer and manager of infrastructure projects,” said Mark Newman, President, Asia Pacific, Lone Star.
“The India infrastructure sector is poised for revival as the evolving framework is becoming more conducive for resolving stressed assets. The collaboration with Lone Star is strategic and presents the potential to attract sizeable foreign direct investment into India,” said Ravi Parthasarathy, chairman of IL&FS.
Indian banks have been reeling under pressure of mounting bad loans. Some lending institutions have been unable to lend new capital due to the amount of stressed loans on their books.