IL&FS Gets NCLT Nod to Sell Mumbai HQ to Brookfield

BY Realty+

The National Company Law Tribunal (NCLT) has approved the sale of infrastructure lender IL&FS’ headquarters, a 10-storey property in Mumbai’s business district Bandra-Kurla Complex (BKC), to global alternative investment major Brookfield Asset Management.

Brookfield’s affiliate company Chronos Properties has emerged as the successful bidder to acquire the marquee property for over 1,080 crores. IL&FS has already received 10% of the total consideration and the deal is expected to be concluded in the current financial year.

The deal is part of resolutions that the government-appointed board has filed with the NCLT. This deal was announced by the then chairman of the board Uday Kotak prior to his tenure ending on April 2.

The ministry of corporate affairs (MCA) has made a few changes to the IL&FS board recently. It has redesignated CS Rajan, who was CMD, as the Non-Executive Chairman, while current Executive Director Nand Kishore has now become the Managing Director. These changes are effective till March 2023.

In its approval for the sale of the property, the Mumbai bench of NCLT has excluded the area spread over 21,644 sq ft out of the total property size, as this was assigned by IL&FS to HDFC Standard Life Insurance Company in 2001. We confirm that NCLT has approved the proposal to sell TIFC (The IL&FS Financial Center) to H1 bidder,”

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 commercial capital. The high-end office building with around 450,000 sq ft of leasable area counts IBM, IDFC, The Carlyle Group, Avendus, and Paypal as key tenants. Top three floors are occupied by offices of IL&FS Group companies and these are expected to be vacated in the due course as the deal reaches closure.

Besides Brookfield Asset Management, several other global and domestic institutional investors had shown initial interest in buying the asset. Brookfield has around 50 mn sq ft of office space across six cities, and also owns The Leela Hotels and Palaces. Overall, Brookfield Asset Management has over $22 bn of assets under management across real estate, infrastructure, renewables, and private equity in the country.

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 triggered a liquidity squeeze that gripped India’s non-banking finance sector. As part of a clean-up, the government then replaced the IL&FS board, which has since been engaged in trying to resolve total debt worth over Rs 99,000 crore as of October 2018.

The debt addressed to date (Rs 55,000 crore) represents over 90% of the overall estimated resolution value. Resolution of the remaining Rs 6,000 crore debt is expected to be achieved by the end of this financial year subject to necessary regulatory and legal approvals.

The board has already submitted resolutions worth Rs 14,000 crore with the courts, of which Rs 7,500 crore have been approved and the transaction closures are underway. This overall resolution estimate of 62% is double the average recovery of 31% under IBC. Of the 347 entities under IL&FS Group as of October 2018, 246 entities stand resolved, leaving 101 entities to be resolved as per the plan.

Tags : National Company Law Tribunal sale infrastructure lender IL&FS headquarters Mumbai Brookfield Asset Management CS Rajan Non-Executive Chairman Nand Kishore Managing Director