IL&FS, Lone Star to invest in stressed infrastructure assets in India

Lone Star Funds and IL&FS have collaborated to jointly invest $550 million, which could result in asset purchases of up to $2.5 billion


The IL&FS and Lone Star collaboration will assist banks, sponsors and asset reconstruction companies (ARCs) to recycle capital and help reinvest capital in fresh projects. Photo: Abhijit Bhatlekar/Mint
The IL&FS and Lone Star collaboration will assist banks, sponsors and asset reconstruction companies (ARCs) to recycle capital and help reinvest capital in fresh projects. Photo: Abhijit Bhatlekar/Mint

Mumbai: Infrastructure Leasing and Financial Services Ltd (IL&FS) on Sunday said it has partnered with global private equity (PE) firm Lone Star to jointly invest in stressed infrastructure projects in India.

Lone Star Funds and IL&FS have collaborated to jointly invest $550 million, which could result in asset purchases of up to $2.5 billion, the companies said in a joint statement.

“The collaboration’s objectives align closely with the objectives of the Government of India (GoI) and Reserve Bank of India (RBI) in resolving stressed infrastructure assets that are causing concern in the banking system,” the statement said.

The collaboration will assist banks, sponsors and asset reconstruction companies (ARCs) to recycle capital and help reinvest capital in fresh projects. Stressed assets across sectors now stand at over 12% of the total loans in the banking system.

“The India infrastructure sector is poised for revival as the evolving framework is becoming more conducive for resolving stressed assets,” said Ravi Parthasarathy, chairman, IL&FS. The collaboration with Lone Star is strategic and presents the potential to attract sizeable foreign direct investment (FDI) into India, he said.

Established in 1995, private equity firm Lone Star invests globally in real estate, equity, credit and other financial assets. Lone Star invests on behalf of its limited partners, which include pension funds for public sector and corporate employees and retirees. It has till date closed over 1350 transactions with an aggregate purchase price of $180 billion.

Incorporated in 1987, IL&FS is one of India’s leading infrastructure financing and developmental institutions in India. It has built a strong portfolio of infrastructure projects aggregating to $25 billion; its roads company IL&FS Transportation Networks Ltd is the largest operator of build, operate, transfer (BOT) road assets in the country.

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