Mumbai: Infrastructure Leasing and Financial Services Ltd (IL&FS), the main holding company for the IL&FS group’s infrastructure investments, is set to raise around $300 million (Rs1,335 crore) by selling a combination of existing and fresh equity shares, two bankers familiar with the development said.
The sale of shares will be to existing overseas shareholders of the closely held non-banking finance company (NBFC), said the bankers who asked not to be named.
IL&FS will sell a portion of its employee welfare trust holding in addition to issuing new shares, diluting equity by 10% and putting the company’s enterprise value at $3 billion, they said.
Mint could not ascertain the size of the stake to be divested by IL&FS Employee Welfare Trust in favour of other shareholders.
A third person who also spoke on condition of anonymity said the company had been considering a stake sale for around six months.
This person said the stake sale may allow the NBFC to meet the capital adequacy norms of the Reserve Bank of India (RBI), adding that a recent valuation had pegged the price of IL&FS shares at Rs1,000-1,100 apiece.
NBFCs are required to have a capital adequacy ratio, a measure of financial strength expressed as the ratio of capital to risk-weighted assets, of 15% under RBI norms.
The company’s unit IL&FS Transportation Networks Ltd, a developer of road projects, in March raised Rs580 crore through an initial public offering (IPO).
IL&FS has not made any public or rights issue in the last three years, according to the prospectus filed by IL&FS Transportation.
IL&FS, initially promoted by Central Bank of India, Housing Development Finance Corp. Ltd (HDFC) and the erstwhile Unit Trust of India, has over the years broadened its shareholder base.
Its main shareholders are state-owned Life Insurance Corp. of India, which owns a 25.25% stake, and Japanese financial services company Orix Corp., which controls 23.05%.
HDFC and Abu Dhabi Investment Authority own 12.68% and 12.32% of IL&FS, respectively.
The stake sale will see overseas shareholders increase their holding in the company. IL&FS Employee Welfare Trust and others hold around 9.53% of IL&FS equity.
Companies such as IL&FS are seeking to capitalize on India’s increasing infrastructure requirements.
Last week, GMR Group, an infrastructure firm with interests in airport management and electricity generation, raised $315 million through a qualified institutional placement (QIP).
GMR’s was the largest fund-raising through the QIP route, which allows firms to raise funds by selling shares or convertible bonds to qualified institutional buyers.
In the 11th Five-year Plan running up to 2012, the country is on course to meeting its infrastructure investment target, according to Prateek Agarwal, head of equities at Bharti AXA Investment Managers.
“Taking into account actual data for the first two years, the revised projections for infrastructure investment in the 11th Plan are broadly in line with the original estimate of Rs20.5 trillion versus Rs9.1 trillion in the 10th Plan,” he wrote in a research note on infrastructure.
“While the increased infrastructure spend is encouraging, a key point to note is the uneven performance across sectors. While investments in power, irrigation and airports are in line with original targets, the big shortfall in roads, railways and ports was offset by investments in telecom and oil,” he wrote.