Brookfield, Godrej Fund in race to acquire IL&FS’ headquarters in Mumbai
Brookfield Asset Management and Godrej Fund Management, the realty-focused private equity arm of the Godrej Group, are in a close race to acquire the headquarters of IL&FS, an iconic property in Mumbai’s financial nerve-centre Bandra-Kurla Complex (BKC), two people with direct knowledge of the development told ET.
IL&FS has received two final bids of around Rs 1,000 crore from these institutional investors and the government-appointed board is expected to select and approve the buyer by end-December.
“The committee will now proceed with the discussions and negotiations with both final bidders separately. The outcome of these discussions will be placed before the board that will select the buyer by the end of this year,” said one of the persons cited above.
The asset is being monetised through a price-discovery mechanism and there was no reserve price set for the property spread over 10 floors. However, the IL&FS board had estimated the property might fetch around Rs 1,200 crore.
The iconic property was one of the first structures to come up in BKC, which is now the de facto Central Business District of the country’s commercial capital.
The high-end office building with around 4.5 lakh sq ft of leasable area counts IBM, IDFC, The Carlyle Group, Avendus and Paypal among its list of key tenants.
The top three floors of the building are occupied by IL&FS Group companies and these are expected to be vacated in due course as the deal reaches closure.
IL&FS is monetising its assets with an objective to manage debt obligations. The failure of IL&FS to meet repayment obligations in September 2018 had triggered a liquidity squeeze that gripped India’s non-banking finance companies. As part of a clean-up, the government replaced the IL&FS board. The new management, led by Asia’s richest banker Uday Kotak, has been engaged in trying to resolve the outstanding debt at the financier.
The building is mortgaged with mortgage lender HDFC for loans outstanding worth Rs 400 crore and the sale proceeds will also be used to pay off those debts.
ET’s separate queries to IL&FS and Godrej Fund Management remained unanswered, while Brookfield declined to comment.
Apart from Brookfield Asset Management and Godrej Fund Management that placed final bids for the property, global institutional investors including the Blackstone Group, Singapore sovereign wealth fund GIC, Ivanhoe Cambridge and Mapletree Investments and RMZ Corp had also shown initial interest in buying the asset.
In a video conference held in April, the Uday Kotak-led IL&FS board told the media that it estimates overall recovery to be around Rs 61,000 crore, an upward revision to its previous estimate of Rs 56,000 crore.
Improved valuations, better operating performance and enhanced recoveries from non-group exposures have helped the management garner more from the assets than initially anticipated.
The new board expects around 95% or Rs 58,000 crore worth of estimated recovery to take place by March 2022. It has already garnered an estimated recovery worth Rs 43,600 crore as on May end.