The investment firm is keen on big ticket and control deals in India. “Investcorp wants to focus on larger deals and is therefore looking to sell off smaller investments at IDFC PE. It is not keen on managing smaller investments," the first person said.
The smaller PE investments of IDFC Alternatives include Parag Milk Foods, a dairy company, Manipal Integrated Services, Medi Assist Healthcare Services Pvt. Ltd, a health management services provider, Doshion Ltd, and Emergent Ventures India Pvt. Ltd, a clean development mechanism (CDM) advisory company.
“We have no comments on the story," an Investcorp spokesperson stated in response to an email by Mint.
IDFC—the parent company of IDFC Alternatives—has marked its alternative asset management as non-core to its overall strategy.
The company, which received approval from the Reserve Bank of India (RBI) to start a bank in 2015, is now focusing on building a bank with a strong retail book. IDFC Bank has proposed to change its name to IDFC First Bank Ltd as it is in the process of amalgamating non-banking financial company Capital First with itself.
IDFC is also looking to sell its asset management business as part of its divestment plan. Initially it was keen on selling its entire alternative asset management to a single buyer but sold its infrastructure investment business separately to US-based Global Infrastructure Partners (GIP).
GIP has bought out the entire infrastructure investment team of IDFC Alternatives but has not taken any exposure in the investments of the firm. In order to offer an exit to investors in the infrastructure fund, the platform investments in the infrastructure sector are being clubbed under one umbrella.
The diversified entity will either be listed or sold to another strategic or financial investor to provide an exit.
The PE business is now being sold separately to Investcorp which is also buying the real estate investment business of IDFC Alternatives.
Like GIP, Investcorp will also be absorbing the private equity and real estate businesses of IDFC Alternatives without taking exposure in their respective portfolios.
The real estate investments of IDFC Alternatives include White City project by Rajesh LifeSpaces in Mumbai, and the portfolios of Bengaluru-based developer Nitesh Estates and Pune-based developer Vascon Engineers.
Mint reported on 8 June that IDFC PE had brought in the UK’s CDC Group as an investor in its third private equity fund, which is nearing end of fund life, through a secondary transaction.
IDFC Alternatives offered to provide an exit to its investors from the third fund amid talk of sale to InvestCorp.
Consequently, some of the investors have sold around half of the portfolio in terms of market value to CDC. The remaining investors will continue to stay invested. CDC is a development finance institution owned by the UK government.
The acquisition of the private equity and real estate businesses of IDFC Alternatives will allow Investcorp to gain a foothold in India. Investcorp currently invests in North America, Europe, West Asia and North Africa.
Investcorp invests in the mid-market segment and has so far invested $36 billion across 150 private equity transactions.
The company is also an active investor in US commercial real estate equity and high-yield debt. Since 1996, the investment firm has made more than 300 property investments totaling more than $11 billion in value.