IL&FS Investment Managers to acquire Saffron Asset Advisors

Mumbai-based alternative investment firm, IL&FS Investment Managers is to bolt management of $400 million of assets onto its books after approving the takeover of rival Saffron Asset Advisors. A merger would be the first significant consolidation in India’s private equity real estate market since the global economic crisis.

IL&FS Investment Managers (IIML) is to reinforce its position as India’s largest private equity real estate firm after approving the takeover of Saffron Asset Advisors, a real estate fund manager with $400 million of assets under management.

In an announcement to the Bombay Stock Exchange following a meeting held last Friday, IIML said, subject to corporate, government and regulatory approval, it would become advisor to Saffron’s two real estate investment vehicles including Yatra Capital, a listed fund which raised €220 million on the Euronext Stock Exchange through two offerings in 2006 and 2007.

The transaction would see IIML grow its assets under management across its three business lines, private equity, infrastructure and real estate to $3.2 billion. Its real estate exposure currently stands at $1.6 billion of assets acquired through IL&FS Realty Funds I and II.

IIML, 52 percent-owned by infrastructure and finance giant Infrastructure Leasing & Financial Services, has invested approximately 60 percent of the second vehicle which closed on $895 million. It is led by Shahzaad Dalal and Archana Hingorani, the latter of whom featured in PERE’s ‘Glass-ceiling breakers’ feature on the 10 most influential woman in private equity real estate. Click here to read the feature.

According to reports in India, Saffron has invested $260 million across 16 transactions since 2005 through Yatra Capital and its private fund Saffron India Real Estate Fund. The firm, led by Ajoy Kapoor, had planned to raise a raft of new funds, namely for the hospitality, logistics and infrastructure sectors. However, amid a challenging fundraising environment, opted in February to shelve these efforts and focus on existing investments instead.

The merger between IIML and Saffron would represent the first significant example of consolidation within India’s private equity real estate sector since the global economic crisis. Reports of investor fatigue towards India private equity real estate funds increased following the crisis prompting many fund managers to shelve or cancel funds including Rutely Capital Partners, Catalyst Capital, Cordea Savills and Protego Real Estate Investors.