ILFS IDFC ADB make city gas network exit

The Indian fund managers have achieved a 17% IRR and 2.6x equity multiple in less than seven years.

Two major Indian private infrastructure players, along with the Asian Development Bank (ADB), have completed a reported INR700 million (€8.9 million; $11.7 million) exit of a gas distribution company after just six-and-a-half years.
 
IL&FS Investment Management, the investment management arm of the Indian infrastructure development and finance company Infrastructure Leasing & Financial Services, first invested INR90 million in Central UP Gas in December 2006, according to an IL&FS spokeswoman.
 
Other investors included IDFC Alternatives and ADB, which reportedly invested a joint INR210 million at the same time. According to local media reports, IL&FS and IDFC each held a 15 percent stake in Central UP Gas, while ADB held a 20 percent stake.
 
All three investors sold their stakes to strategic buyer Indraprastha Gas, which supplies gas and fuel primarily to the Delhi region. The company’s acquisition gave the investors a 17 percent gross internal rate of return (IRR) and a cash multiple of 2.6 times, according to the IL&FS spokeswoman.
 
“This strategic sale has been completed despite significant headwinds in the city gas distribution sector,” she said. The holding period was only six-and-a-half years.
 
Central UP operates a city gas distribution network in the two cities of Kanpur and Bareilly, which are both less than 200 miles from New Delhi. The network comprises compressed natural gas stations for cars and a piped natural gas grid, which services the commercial, industrial and domestic demands of the cities.
 
The company hopes to expand to other cities in the province of Uttar Pradesh eventually, according to the IL&FS website.
 
The exit came out of IL&FS’s Pan Asia Project Development Fund, which invested a total of $39 million across seven infrastructure assets. Central UP is the second exit out of that fund, according to the firm’s website.