Blackstone & Brookfield interested In IL&FS Headquarters. One Offer Is for Rs950 Crore
The prominent corporate headquarters of Infrastructure Leasing & Financial Services (IL&FS), one of the earliest to come up in the bustling financial district of Bandra-Kurla in Mumbai, is on the block. Selling its headquarters is one of minor options for cash-strapped IL&FS , which has a debt of Rs100,000 crore, to raise funds.
 
The circular IL&FS headquarters has attracted the interest of two bidders at least—private equity firm Blackstone group of the US and Canada-based Brookfield Asset Management, one of the largest global real estate investment firms. Both Blackstone and Brookfield are two of the largest foreign players in the real estate business in India. It appears that Blackstone is willing to pay Rs950 crore for the building. Sometime ago, when Hari Shankaran was the managing director, IL&FS was demanding Rs1,200 crore for the property.
 
The reason why IL&FS has demanded a much higher price is because all the buildings in the Bandra-Kurla area now enjoy a higher floor space index—(FSI), the measure of how much floor space that can be constructed. However, this extra FSI is only on paper. Due to proximity to the airport, it is unlikely that buildings in BKC (Bandra Kurla Complex) area will be able to utilise the increased FSI and go much higher.
 
The sale of IL&FS headquarters would be the first publicly visible action marking the dismantling of a maddeningly complex and highly leveraged IL&FS group. The group, comprising as many as 347 subsidiaries and associate companies, has emerged as the new template of mis-governance of public funds under the garb of public-private partnership and the personal enrichment of the senior officials, many of whom were drawn from the ranks of the Indian Administrative Service (IAS).
 
Brookfield has been an aggressive acquirer of marquee assets. In April this year, it bought Equinox Business Parks, a prime commercial property also at BKC, for Rs2,400 crore from Essar group. The 10-acre business park comprises four towers, with a leasable office space of about 1.25 million sq ft. Earlier in 2016, Brookfield bought 4.5 million sq ft commercial properties from the Hiranandanis in Powai area of Mumbai and 17 million sq ft of Unitech Corporate Parks in 2014.
 
Blackstone is also quite active in India. According to reports, Embassy Office Parks, a joint venture between Blackstone and Embassy group, is looking to float the public issue of its real estate investment trust (REIT) early next year. Embassy Office Parks holds a portfolio of 33 million square feet across Mumbai, Pune, Bengaluru and Noida. About 24 million sq ft of this portfolio is completed and out of this around 95% is leased out.
 
Annual rental income of the portfolio is over Rs2,000 crore. Blackstone Real Estate has committed to $5.3 billion across 31 investments in India. Of this, $3.9 billion is in office assets; it has invested in more than 100 million sqft of office space, says a report from Business Standard.
 
IL&FS has rented out several floors of its headquarters. It advertises itself to prospective clients as one of the biggest commercial buildings in BKC and is the most noticeable upon entering G Block, 300 metres away from BKC food court. Standing 10 floors high, it has a floorplate measuring 40,000sq ft.
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COMMENTS

Ashok Senniappan

6 days ago

For these morons ,IL&FS can have its HQ at Dharvi slums.

Shrik S

1 week ago

Maybe the whole fiasco is a well oiled well planned scheme to allow entry to specific actors into the economy with all animals of the circus coming together to ensure the audience gets cheated of its fees fully and yet show them that the circus is entertaining?

Ashok ashok

1 week ago

Hope the issue is resolved at the earliest and the NCD's which they have given to customers get paid by selling the assets.

Karan Gandhi

1 week ago

Equinox (located on LBS Marg) with 1.2 MN sft. sold for ₹2400 crores, that works out to ₹19,200 per sft. The seasoned developers that have grade A buildings in the G-Block of BKC have been raising finance at a lease rental discounting rate of ₹40,000 per sft.!

IL&FS Scandal: GN Bajpai Resigns from the New Board, say Reports
GN Bajpai, the member on the newly appointed board at Infrastructure Leasing & Financial Services Ltd (IL&FS) has resigned from the board with immediate effect due to personal reasons, say reports. Mr Bajpai was former chairman of SEBI.
 
Mr Bajpai was one of the seven directors appointed on the board of debt-ridden IL&FS. The new IL&FS board also includes Kotak Mahindra Bank managing director Uday Kotak, ICICI Bank executive chairman GC Chaturvedi and former bureaucrats Malini Shankar, Vineet Nayyar from the Mahindra group, veteran auditor Nandkishore and CS Rajan, former chief secretary of Rajasthan.
 
The new board on Wednesday submitted a plan to revive IL&FS to the National Company Law Tribunal (NCLT), paving the way to a potential resolution of the group’s future.
 
The government this month took control of IL&FS after it defaulted on some of its debt, triggering fears of contagion across India’s financial system. “It is a dream and hope blueprint for revival,” Sanjay Shorey, Director for Legal Prosecution in the Ministry of Corporate Affairs (MCA), told The Tribunal.
 
Mr Shorey said the new board of IL&FS was looking at strategies, including an outright sale of the entire IL&FS group and sales of its subsidiaries or assets, among other things.
 
The company later said in a statement after the tribunal hearing that the options could broadly involve significant capital infusion, divestments and debt restructuring at IL&FS group, its subsidiaries and asset sales.
 
The NCLT told the MCA that the holding company will have to make all its 347 subsidiaries part of the resolution roadmap within 15 days.
 
The new board will follow due processes in the finalisation and implementation of the plans and expects to complete the process, in stages and parts, in the next six to nine months subject to market and economic conditions, IL&FS said.
 
Separately, Neeru Singh, who was independent director of IL&FS Transportation Networks Ltd has also resigned from the company board. 
 
(This story has been published from a wire agency feed without modifications to the text. Only the headline has been changed.)
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COMMENTS

t j ethiraj

1 week ago

Whenever there is a scandal involving public money the top man resigns and escapes from the punishment. At lowers tgey are suspended for some time and reenter after sometime.
When the mater takenup in courts after few decades all are acquited for lack of evidence etc.
Money lost is lost.It will never be recovered and no one is guilty.At the most they will say it is system failure.

B. Yerram Raju

2 weeks ago

Nearly a lakh of crore rupees gone with the wind with absolute impunity thus far. This should at least teach a lesson to the Government that institutions too big to fail cannot be created in the financial sector. Merger of the three Banks on cards duly approved by the related Bank Boards should be put on hold. Country's financial sector needs better regulation and risk supervision. How can the Frankenstein Monster escape the eagle eye of the SEBI, RBI and GoI for decades? Obviously "some where something is rotten in the State of Denmark" (India)!!

SuchindranathAiyerS

2 weeks ago

One Babu does not a purge make

IL&FS Scandal: New Board Finds Money Circulation, Financial Mismanagement, Malpractices in the Entire Group
The new board at Infrastructure Leasing & Financial Services Ltd (IL&FS), headed by banker Uday Kotak has so far found erosion of significant amount of money among the group companies through "adoption of circuitous transactions to circumvent regulatory prescriptions".
 
While recognising the complexities and challenges set out above, the new board says it is additionally facing a significant challenge of lack of reliable information and gaps in the data in working towards a resolution. "The New Board has noted that under the previous management, there was no suitably empowered central financial control function that maintained information and accuracy at the group level. Critical decisions on prioritising use of funds and making payments were taken by individual entities without a central control function," it added.
 
In its resolution plan submitted to the National Company Law Tribunal (NCLT), the new board headed by Mr Kotak says, ".... (the board) believes that large parts of the IL&FS Group were, in the past, operated as a single enterprise with no boundaries of legal entities and separate managements. This appears to be one of the key governance shortcomings that has led to a large contagion impact on creditors of the IL&FS Group."
 
"For instance," it says, "on a preliminary analysis of the financial statements and records of IFIN for the last three financial years, it is noticed that IFIN had outstanding loans and investments to companies in the IL&FS Group of Rs5,728 crore, Rs5,127 crore, and Rs5,490 crore in FY16, FY17 and FY18, respectively. Prima facie, these appear to be significantly in excess of permissible norms, in all of the three years. 
 
If this is applied for calculation of capital adequacy, IFIN would have significant negative capital adequacy in each of these three years. Further, we note from records available that loans to one of the companies in the IL&FS Group in excess of Rs1,500 crore had been routed through eight other companies of the IL&FS Group, reflecting adoption of circuitous transactions to circumvent regulatory prescriptions. 
 
The New Board understands that appropriate authorities are undertaking investigations into the affairs of the IL&FS Group, it added.
 
The board says it has also been given to understand that there are certain entities, which, in practice but not necessarily de jure, may have been considered part of the IL&FS Group for the purposes of funding. "For instance," it says, "IFIN has an exposure in excess of Rs900 crore to companies which are subsidiaries of associates or joint ventures (JVs) of IL&FS (such as HCPL) and IL&FS Employee Welfare Trust. These do not get consolidated into the accounts of IL&FS and at the same time, have been treated by the previous management as ‘internal debt’. 
 
In addition, the board says it is unable to validate whether  due  processes  and transparency have been followed by the previous management in pursuing various asset monetisation activities. For example, certain asset of the IL&FS Group was transferred from one entity in the group to another entity in the group in June 2017 at a value of Rs30.8 crore for cash based on an independent fair valuation, and in just about a year (in June 2018), a committee of directors resolved to sell this to a third party at Rs1 crore (i.e. at a significant discount to the original intra-group purchase price), the reasons for which the board finds are inadequately supported, it added. Moneylife has exposed this malpractice a few days ago.
 
The board also fond that post superannuation, IL&FS has been appointing some of its retired employees as consultants totalling 55 individuals at an annual cost of Rs16.5 crore. The new board decided to cancel the contracts of these consultants subject to some exceptions. 
 
Companies in the IL&FS Group have had the practice of leasing properties owned by select employees or their relatives as guest houses of group companies. "Even as the new board is undertaking further reviews of all such arrangements, illustratively, in relation to six such properties that were taken on lease, the monthly lease rent aggregated to Rs15.1 lakh per month 
and with a deposit of Rs2.26 crore. The New Board has initiated steps to terminate such leases," it added.
 
The new board says it also noted that under the previous management, there was no suitably empowered central financial control function that maintained information and accuracy at the group level. "For instance, there is no available central repository of bank accounts in IL&FS and there is a challenge in extracting data and consolidating outputs as the data has been stored in different formats and different ERP systems across the IL&FS Group," it added.
 
The new board headed by Mr Kotak says, it recognises that over the years, the IL&FS Group has created valuable assets. However, it says, high leverage, poor returns from investments made, asset liability mismatch and various other factors, are expected to entail sacrifices from various stakeholders in achieving the final resolution, which is inevitable in a situation such as this.
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COMMENTS

Ashok Senniappan

1 week ago

Had Vegetable vendors were made the Directors of IL&FS Group the company would have been better of today.Any how earlier there was one Ali baba, of late we fine them every were be it SEBI,NSE,Banks etc. Any how nobody needs to worry Tax Payers are there to rescue these institutions.

TIHARwale

2 weeks ago

Ravi Parthasarathy and erstwhile IL&FS erstwhile members needs to made state guest at TIHAR residency without further delay.

REPLY

Prakash Prabhu

In Reply to TIHARwale 2 weeks ago

Hope that day comes to pass, but will it? This ilfs mess had triggered losses in several investment vehicles for the common man.

B. KRISHNAN

2 weeks ago

Acquiring a property at 36 crore and selling it to a third party at just 1 crore shows criminal conspiracy. Will the guilty be proceeded against and put in jail? Most probably not, going by what happens in our country. Only if exemplary punishment is meted out to some of these white collar thugs, will this bleeding of public funds stop.

Ramesh Poapt

2 weeks ago

Acid taste for Uday! Will he clean garbage?

R Balakrishnan

2 weeks ago

People like Harishankar, Arun Saha etc must be in the full knowledge. Ravi could not have done these without these two, who have been around since eternity. It is time the CBI or EOW took things in hand . Surely, they must be tracing the wealth of all the employees by now. It would be the ultimate travesty if nothing is discovered

REPLY

S Balakrishnan

In Reply to R Balakrishnan 2 weeks ago

as far as i know from media,apart from 'questioning', none of these chaps has been really proceeded against.
a newspaper report today states r p was in london for 'medical treatment', has returned and was questioned by the financial fraud investigating authority. not a word in our media after the scandal broke out that he wasn't in the country (a fool could guess it).
91k cr is obviously not enough. wonder what the tipping point is.
blatantly handled with kid gloves with the new board talking of 'valuable' asset creation after confessing they don't have clue of the fin situation of this shadowy group.

rajee

2 weeks ago

Please recover full salary from the existing top management

REPLY

S Balakrishnan

In Reply to rajee 2 weeks ago

good deal for them.
91k cr debt created, 100 cr max returnable.

BV SUDHANVA

2 weeks ago

VARIOUS OTHER FACTORS very very important.

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