Mumbai: Infrastructure Leasing and Financial Services Ltd (IL&FS), the holding company for IL&FS group’s infrastructure investments, is close to signing a share sale agreement with investors to raise around $400 million (Rs1,892 crore) by selling an 8% stake at Rs1,099 a share, two investment bankers and a senior IL&FS official familiar with the development said.
Some of the shares to be sold will come from employees, who will get more than a 10-fold return on the investment made in 2000.
The non-banking financial company has already sold around 3% of the stake to two of its existing shareholders—state-owned Life Insurance Corp. of India (LIC)/UTI and Japan’s Orix Corp.—and will sell an additional 5% stake to two investors, including US financial services company Bay Capital, through a mix of fresh shares and shares from IL&FS Employees’ Welfare Trust. Tampa, Florida-based Bay Capital did not respond to email queries.
The IL&FS official, who did not want to be named because the deal is yet to be finalized, declined to name the other investor.
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The two investment bankers also declined to be named for the same reason.
According to the broad contours of the deal, the two new investors will also get a stake in IL&FS’ subsidiaries that have interests in waste management and renewable energy.
The new investors will benefit from both the holding company and the operating companies, the IL&FS official said.
Hiroko Maeda, a spokesperson for Orix, declined to comment.
The money from the sale of shares from the welfare trust, estimated to be around $20 million, will be distributed to employees, the company official said. “It is only a small portion of the trust’s stake we have sold and it is not a windfall,” he said.
Graphic: Yogesh Kumar/Mint
“Unlike technology companies where employees are given stock options, we sell a portion of the stake in the employee trust to reward employees,” the IL&FS official said, adding that most of the funds from the sale of fresh shares will go towards funding infrastructure projects.
Employees bought these shares at Rs100 each in early 2000, and some sold part of their holding in 2007 at Rs275.
“The infrastructure sector in India is now moving into a stage where investors are looking beyond power to urban infrastructure, and transmission and distribution, and the government is looking to investors to fund this infrastructure build,” said Saurabh Mukherjea, head of equities at investment bank Execution Noble.
Mint had reported on 19 April that IL&FS was planning to raise money through sale of fresh shares as well as the welfare trust’s existing equity.
IL&FS has not had a public or rights issue in the last three years, according to a prospectus filed by IL&FS Transportation Networks (India) Ltd, which raised around Rs700 crore from a public issue in March.
LIC, which owns a 25.69% stake, and Orix, which has 22.68%, are the main shareholders in IL&FS. Housing Development Finance Corp. Ltd and Abu Dhabi Investment Authority own 12.48% and 12.12% of IL&FS, respectively.