Real Estate Investment in India Powerpoint Presentation by stw16098

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									December 2010
Certain statements included in this presentation may constitute "forward-looking statements" in respect of the Company’s
operations, performance, prospects and/or financial condition. By their nature, forward looking statements involve a number
of risks, uncertainties and assumptions and actual results or events may differ materially from those expressed or implied by
those statements. Accordingly, no assurance can be given that any particular expectation will be met and reliance should
not be placed on any forward-looking statement. Additionally, forward-looking statements regarding past trends or activities
should not be taken as a representation that such trends or activities will continue in the future. No responsibility or
obligation is accepted to update or revise any forward-looking statement resulting from new information, future events or
otherwise. Nothing in this presentation should be construed as a profit forecast.


This presentation does not constitute or form part of any offer or invitation to sell, or any solicitation of any offer to purchase
any shares in the Company, nor shall it or any part of it or the fact of its distribution form the basis of, or be relied on in
connection with, any contract or commitment or investment decisions relating thereto, nor does it constitute a
recommendation regarding the shares of the Company. Past performance cannot be relied upon as a guide to future
performance. Information in this presentation reflects the knowledge and information available at the time of its preparation.




                                                                                                                                      2
Section A : Overview                4
IL&FS Group
IIML
Key Success Factors
Management Team
Investment Process


Section B : Funds                   11
Key Milestones
Funds across Spectrum
Exit Experience


Section C : Financial Performance   19
Past Performance
AUM
Consolidated Financials




                                         3
4
                          –   Formed in 1988
                          –   Initial participants were Indian Banks and Institutions
Earliest Infrastructure
      Developers          –   International Institutional Investors inducted over the years
                                •   ORIX Corporation (Japan), Abu Dhabi Investment Authority
                                •   Earlier stakeholders include IFC, Govt. of Singapore, HSBC




                          –   Multiplicity of roles : As sponsor, developer, advisor, and financier
                          –   Promoted over 50 sector dedicated Special Purpose Vehicle companies
 Unique Positioning
                          –   Developing infrastructure projects worth over $ 30 billion
                          –   In-house capabilities to take projects from ‘concept’ to ‘commissioning’




                          –   Promoted India’s first private sector toll road and water supply project
                          –   Sponsored India’s first infrastructure focused PE fund with AIG

    Pioneering            –   Early entrants in niche growth areas like waste management, renewable
 Development Role             energy, education with a strong social orientation
       Play
                          –   Project development partnerships with various State Governments
                          –   Advisor to Central and State Governments for developing legal and policy
                              frameworks
                                                                                                         5
        Infra Development                                Financial Services

        IL&FS Infrastructure                            IL&FS Financial Services
         Development Corp                              IL&FS Securities Services




          Private Equity                                 Fiduciary Services

         IL&FS Investment                                IL&FS Trust Company
IL&FS




             Managers




                                  Service SPVs

                      Ecosmart (Environment), IETS (Education) ,
                       ITL (Technology) , IPMSL (Property Mgmt)



                               Infrastructure SPVs

                      ITNL (Roads), IEDCL (Power), IMCL (Ports),
                     NTADCL (Water), IWMUSL (Waste Mgmt) etc

                                                                                   6
   IL&FS Group, enjoys a pre-eminent position in the                Seen the Indian PE world expand from less than

    infrastructure and financial services sectors                     US$ 20 mn to more than US$ 15 bn

                                                                                Investment spectrum spans VC to PE; Buy-
                                                                                 outs to PIPEs
   Strong relationships with Governments,
    Multi-lateral and domestic Financial                                                 Cross sectoral presence across 15
    Institutions and Corporates                                                           Funds
                                                                                                  General Purpose PE
                                                                                                  Real Estate
                                                                                                  Infrastructure
                                                          IIML
   Team experience straddles fund                                                           Manages US$ 3.2 bn for
    and economic cycles                                                                       marquee international Limited
                                                                                              Partners and domestic
        Over 140 investments since 1998
                                                                                              Institutions

             63 exits / liquidity events                                       About 90% of capital has an average
                                                                                 contractual life of 7 years
                    Realized gross US$ IRR of 26% p.a.
                                                                    Fund size have increased with experience; wider and
                             3 Funds fully divested                 deeper strategy to propel growth

                                                                                                                              7
    Revenue
    Revenue                 Management Fee:
     Stream
     Stream
                            - Typically 1.5-2% of AUM for the fund life
                            - Highly visible, annuity revenue stream over 6-10 years

                            Carry:
                            - Performance upside through profit share
                            - Hurdle rate ranges between 8-11% p.a.
                            - Carry is 20% of profits from investments
                            - A upside component as Fund size / Asset under Management increases



 Investment
Investment                  -   Long-term investment horizon of 3-5 years
    Model
   Model                    -   Majority investments in unlisted companies
                            -   Active investors with clear focus on value creation
                            -   Mitigates risk of stock market volatility




     Indirect exposure to growth potential of large unlisted companies
             Better positioned to create upsides vs managers of other asset classes
                  Documented advantages of PE participation in the value of unlisted companies
                               Higher degree of value add and relatively early stage of investment provides significant
                                upside at exit
                                                                                                                           8
Banks/ Institutions   Insurance /Pension Funds                                 Others




                              This is not an exhaustive list of contributors. In most instances, names of
                              contributors can not be revealed on account of confidentiality
                                                                                                            9
             Mr. Shahzaad Dalal                                        Dr. Archana Hingorani
             Vice Chairman                                             CEO and Executive Director

             •26 years of financial markets                            •24 years of experience in the financial
             and investment experience                                 services industry, including teaching
                                                                       finance and research
             •MBA from Northeast Louisiana
             University                                                •MBA and        PhD.    University    of
                                                                       Pittsburgh




                                   Private Equity



                                                                        Legal, Accounts & Risk
Investment Team
                                     Real Estate                                Team
    Size : 37
                                                                               Size : 18



                                    Infrastructure



                                              IIML Employees own over 10% in the Company
                                                (based on shares held and options issued)
                                                                                                                  10
11
                                                                    Saffron Fund – II, Standard Chartered IL&FS Asia Fund
                                                                IL&FS India Realty Fund – II; IL&FS Milestone Fund II
                                                                                  IL&FS Milestone Fund
                                                                                                                                   2009
                                                                 Pan Asia Project Development Fund                             2008

                                                                                                                        2007
                                                                 IL&FS India Realty Fund- I
                                                                                                               2006

                                                                                                       2005

                                                                                               2004

                                                                                        2003          Tara India Fund III;
                                                                                 2002                  Urjaankur Fund
                                     India Project
                                   Development Fund                      2001
                                                                                                                      Saffron Yatra Fund
                                                                  2000
                         India Auto                                                      Leverage India Fund
                        Ancillary Fund                   1999

                                                  1998

                                          1997
    South Asia                     1996               AIG India
Regional Apex Fund                               Sectoral Equity Fund
                            1995

                     1994



                                                                                                                                          12
             Private Equity                                 Real Estate                             Infrastructure


   Two active funds aggregating                Established 2005; first of the real      Pan Asia focused Infrastructure
    US$ 378 mn                                   estate funds in India                     Funds

   First Fund fully divested; distributed      Funds aggregating US$ 2.0 bn             Two active Fund aggregating
    carry                                                                                  US$ 703 mn
                                                JV partnership in yield based Funds
                                                                                          JV partnership for the core
                                                Acquired two RE funds aggregating         infrastructure fund
                                                 $ 400 mn in 2010 – one of which is
                                                 a Euro 220 mn Euronext listed fund
                                                 (Yatra Capital)



                       A diversified portfolio with a vast experience in managing funds

                                     across all the sectors and business cycles




                                                                                                                             13
IIML’s Experience
 IIML’s Experience                                            Investee Companies
                                                               Investee Companies


     US$ 262 mn invested in 49 transactions


     Early investors in Retail, Shipyard, Media




Name                                  Vintage      Corpus     Investments – Across Sectors
                                                               Investments – Across Sectors
                                                   (US$ mn)

                                                                              Life Sciences
Growth PE Funds                                                                    10%
                                                                                                    IT & ITES
                                                                                                       24%
    AIG Indian Sectoral Equity Fund    1996          91

    Leverage India Fund                2004          153
                                                                       RMCS
                                                                        25%
    Tara India Fund III                2007          225

VC / Sector Specific Funds

    India Auto Ancillary Fund          1998          15
                                                                                              Manufacturing
    South Asian Regional Apex Fund     1995          25                                           41%


                                                                                                                14
IIML’s Experience
 IIML’s Experience                                          Investee Companies
                                                             Investee Companies


    Pioneer in India - First RE fund launched in 2005


    Early investors in SRA & Industrial Parks


    US$ 1.3 billion already deployed in 58 transactions



Name                                Vintage      Corpus     Investments – Across Funds
                                                             Investments – Across Funds
                                                 (US$ mn)

                                                                                                  Saffron ‐ II
Core Real Estate Funds                                                    Saffron ‐ Yatra             2%
                                                                               16%
    IL&FS India Realty Fund I        2006          525
                                                                     Milestone ‐ II
    IL&FS India Realty Fund II       2007          895                    4%                                     IIRF ‐ I
                                                                     Milestone ‐ I                                45%
                                                                         7%
    Saffron Funds                  2007/09         393

Yield Based Funds
                                                                                      IIRF ‐ II
    IL&FS Milestone Fund I & II      2007          220                                  26%



                                                                                                                            15
IIML’s Experience
 IIML’s Experience                                         Investee Companies
                                                            Investee Companies


     Over US$ 456 mn invested in 34 transactions


     Early investors in Telecom, Roads, City Gas, Rail


     Two Funds fully divested ; generated a gross
      return of 23% p.a. and 27% p.a. respectively

                                                Corpus     Investments – Across Sectors
                                                            Investments – Across Sectors
Name                                  Vintage   (US$ mn)

                                                                                      Telecom
Infrastructure Funds                                                                     5%

                                                                     Ancillary
    AIG Indian Sectoral Equity Fund    1996          91
                                                                      34%

    SCI Asia Infra Growth Fund         2008          658                                             Energy
                                                                                                      34%
Project Development Funds

    India Project Deve. Fund           2000          16                Logistics
                                                                         6%                     Transportation
                                                                              Water
    Pan Asia Project Deve. Fund        2006          45                          5%
                                                                                       Ports         8%
                                                                                        8%



                                                                                                                 16
Return Profile – Deep experience and consistent performance
Return Profile – Deep experience and consistent performance

                            Returns               Number of             IRR   Multiple
                                                 Investments

                Realized Investments                   45               26%     2.3x
               In addition, 18 investments have had liquidity events


 Divestments – Across a mix of strategies
 Divestments – Across a mix of strategies

                            Trade Sale
                               16%                           Buyback
                                                               24%




                 Strategic Sale
                      19%




                                                         Listed / IPO
                                                             41%




                                                                                         17
                                              Gross IRR (%)
Company                        Sector                          Gross Multiple
                                              (In US$ terms)


Shopper's Stop            Consumer Services       22.5              3.6


iMetrex Technologies              IT              31.9              3.4


Indiagames                        IT              72.0              14.0


ibn18 Broadcast Limited         Media             34.0              2.6


Hotel Leela Venture           Hospitality         85.9              2.3


Max Telecom Ventures          Telecom             19.9              4.0


Noida Toll Bridge               Roads             23.5              3.0


ABG Shipyard                Manufacturing         72.5              4.2


SpiceJet                       Aviation           25.6              1.8


Indraprastha Gas               Energy             64.9              7.0



                                                                                18
19
                  AUM increased 19x



            Revenues increased by 22x



                PAT increased by 21x



     Dividend increased at a CAGR of 27%
(Total Payout of Rs 62.5 per share (for one share of Rs 10 in 2000)




                  Stock Price grew 57x
               (Compared to Sensex growth of 5x)




                                                                      20
Total AUM
US$ billion

                                       AUM grew at a CAGR
                                          of 60% during
                                        FY2006 to FY2011




                               AUM Break-up FY 2011
                      Private Equity
                           13%




              Infrastructure
                   23%


                                                           Real Estate
                                                              64%




                                                                     21
                                                                                                        (Rs Mn)
                                                        FY 2007                  FY 2008     FY 2009   FY 2010
Total Income                                                  601                    1,057     1,642     1,759
Total Costs                                                   221                     592       796       803
PBT                                                           380                     465       846       956
PAT                                                           178                     319       623       741
PAT Margin (%)                                                 30                      30        38        42
Net Worth                                                     440                     710       928      1,368
EPS (Rs)*                                                      1.5                     1.6       3.1       3.7
Dividend (%)**                                                 40                      55        70        75
* Adjusted for 1:2 Bonus Issues in FY 2007 and FY 2009, 5:1 share split in FY 2009
** Percentage of Face value of share of Rs 2 each
                          Rs million




                                                                                                                  22
   IIML has a successful business model built assiduously over the last decade
    ◦ Fund Manager of repute
    ◦ A port of first call for investees


   Business model to be replicated resulting in enhanced AUM / revenues through
    ◦ Larger follow on funds
    ◦ New emerging opportunities
    ◦ Extending Geographies


   Substantial increase in activity levels on all counts in the next 2-3 years
    ◦ Enhanced Fund raising
    ◦ High level of investment deal flow
    ◦ More investments to reach liquidity / exit stage
          Carry in the medium term




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