UK’s CDC Group invests in IDFC arm’s third private equity fund
CDC Group’s investment provides exit to some existing limited partners in IDFC Alternatives
Mumbai: IDFC Ltd has brought in the UK’s CDC Group as an investor in the third private equity (PE) fund managed by its alternative asset management business IDFC Alternatives Ltd, two people aware of the development said. CDC’s entry provides an exit to some of the existing limited partners (LPs) of IDFC Alternatives.
IDFC Alternatives has three businesses—infrastructure, private equity and real estate.
Its parent IDFC Ltd has already agreed to sell the infrastructure business to US-based Global Infrastructure Partners, and is in talks with Gulf-based Investcorp to sell the other two businesses.
“The third PE fund of IDFC Alternatives is nearing its fund life. The firm gave an option to the limited partners or investors to exit the fund by bringing in CDC. The offer was made in order to allow the investors to make a quicker exit,” the first of the two people cited above said.
Consequently, some of the LPs have sold around half of the portfolio in terms of market value to CDC. The remaining investors will continue to stay invested.
The parent firm, IDFC, has marked its alternative asset management business as non-core, and aims to sell it and focus more on the banking business.
CDC is a development finance institution owned by the UK government. Its India investments include HDFC Bank Ltd, Ashoka Buildcon Ltd and Srei Infrastructure Finance.
“This is a secondary transaction. Some LPs wanted liquidity and so the option was given to them. CDC takes their place as an LP in the fund now,” said the second person.
Spokespersons for IDFC and CDC Group declined to comment.
While the financial details of the transaction could not be immediately ascertained, CDC bought the portfolio at a “minor” discount to the market value of the investments to ensure some returns when it decides to make an exit in future, the second person said.
IDFC Alternatives raised its third private equity fund in 2008 and has deployed $644 million through the fund since then.
Some of its current investments are Manipal Integrated Services, Parag Milk Foods, Medi Assist Healthcare Services Pvt. Ltd and StarAgri Warehousing and Collateral Management Ltd.
Mint had reported on 24 May that Gulf-based investment firm Investcorp is close to buying the private equity and real estate business of IDFC Alternatives.
Investcorp, with offices in New York, London, Bahrain, Abu Dhabi, Doha, Riyadh and Singapore, manages more than $22.2 billion of assets across asset classes such as private equity, real estate, special situations and credit.
The firm has also entered into an agreement with US-based infrastructure-focused investment firm Global Infrastructure Partners to sell its infrastructure investment business.
“The transaction value mostly accounts for personnel that will be absorbed by GIP. It does not take into account the valuation of the portfolio companies. The same strategy will be followed for the PE and real estate business as well,” the second person said.
He added that a separate exit strategy will be planned at a later stage for infrastructure-focused investments.
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