India’s largest infrastructure lender is selling its renewable energy assets to avoid defaulting on its debts

• The cash-strapped IL&FS, India’s largest infrastructure lender, announced on 28 November that it had initiated the process of seeking bids for its wind and solar power assets.
  
• The sale is part of a resolution plan that the Uday Kotak committee submitted to the National Company Law Tribunal (NCLT), a special insolvency court, on 31 October.
  
• The move will be followed with with many more asset sales, capital infusions and debt restructuring deals as the committee hopes to complete the resolution process of IL&FS by mid-to-late-2019.
  

The cash-strapped IL&FS, India’s largest infrastructure lender, announced on 28 November that it had initiated the process of seeking bids for its renewable energy asset portfolio.

The renewable energy assets up for sale include a number of operational and soon-to-be operational wind power plants across India with a total capacity of nearly 1,000 MW, the asset management and project development businesses for these wind power plants, and the project management business for solar power plants with a capacity of 300 MW.

While the net worth of these assets wasn’t specified, media reports said earlier this month that GAIL India, a government-owned gas utility firm, would consider buying the wind energy assets at a considerable discount.

The decision to sell the controlling stake in these assets was taken by the government-appointed committee, which is led by banker Uday Kotak. The committee is tasked with monetising the infrastructure lender’s assets so it can pay off its debt obligations and avoid bankruptcy.

The sale is part of a resolution plan that the Uday Kotak committee submitted to the National Company Law Tribunal (NCLT), a special insolvency court, on 31 October. It will be followed with many more asset sales, capital infusions and debt restructuring deals as the committee hopes to complete the resolution process by mid-to-late-2019.

The seven-member committee replaced IL&FS’s board of directors in early October and immediately began working on a plan to turn around the company’s operations.

The task is considerable. With over ₹940 billion in debt and a byzantine corporate structure that includes 348 subsidiaries, restructuring the infrastructure lender’s operations will be difficult.

However, the committee has maintained that its goal is not to cut up the company and sell it off in parts, stating that its “value would be preserved” as the plan for the resolution of its debts was drawn up.

Recent attempts at monetising IL&FS’s assets have been met with enthusiasm from the market. Earlier this week, the company said that it had received more than a dozen bids for controlling stakes in its securities services business, IL&FS Securities Services Ltd, and settlements and clearing arm, ISSL Settlement & Transaction Services Ltd, which were put up for sale on 12 November.


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