IDFC

Case Studies

From helping mid-cap companies to strengthen their business, providing legal support and financing projects to helping companies go public through IPOs, IDFC is a trusted name for small and large enterprises.

Our 'one firm' philosophy helps businesses leverage the expertise provided by our verticals. Whether it is working seamlessly to help infrastructure companies build the India of tomorrow, provide finance for prestigious projects or investing in businesses that have potential for high-growth in future, the IDFC advantage comes from our core philosophy of being ‘one firm’ that’s in a number of businesses.

Here is a small glimpse of some of our successes across verticals and different sectors.



Wired together
How three IDFC verticals helped a JV raise Rs. 500 crore
for a project to provide IT services for Delhi International Airport.

The case:
IT services provider Wipro bid and won a contract to undertake the IT systems work for Terminal 3 of the Indira Gandhi International Airport at New Delhi. Terminal 3 is slated to be one of the biggest airport terminals in the world and would be completed by October 2010, in time for the Commonwealth Games.

A company called Wipro Airport IT Services Limited was formed as a joint venture (JV) between Wipro and Delhi International Airport Pvt. Ltd. (DIAL), where Wipro holds 74 per cent stake with the rest being held by DIAL. The JV then entered into a Master Services Agreement (MSA) to provide airport IT infrastructure and services at Terminal 3. The contract is for a period of 10 years and extendable on mutually agreed terms.

The challenge:
The total external finance requirement for the project was Rs. 500 crore and included the cost of hardware, software and implementation. Terminal 3 will cater to all international flights and all non-low cost carrier domestic flights to and from Delhi. Information technology is also a key driver for critical airport operations. Therefore the project holds significant importance for both, DIAL and Wipro.

As a result, IDFC stepped in to provide the external finance needed for implementing this prestigious project.

IDFC's ‘one firm’ solution:
The deal was a challenging one, but the seamless working between three IDFC verticals - IDFC Capital, IDFC Project Finance and IDFC Legal - saw the transaction being dealt with smoothly. IDFC was the sole lender of the project. It originated from IDFC Capital, which stepped in to leverage its strong relationship with the Wipro Group.

IDFC Capital, with inputs from IDFC Project Finance and IDFC Legal then put together a unique financing structure that met with the expectations of Wipro. Thus, all the three verticals leveraged on their expertise to successfully conclude the deal for the Terminal 3 project, which is currently under implementation, and also won a cross sale award for IDFC Capital's debt team.

How it worked at IDFC

  • IDFC Capital: Originator of the deal
  • IDFC Project Finance: Provided unique financing solutions
  • IDFC Legal: Put together the financing structure

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Building trust
Four IDFC businesses tied up with infrastructure company
Ashoka Buildcon, to win and finance two highway projects

The case:
Ashoka Buildcon Ltd. (ABL) is an emerging infrastructure company that builds highways and roads across India. As part of its business, ABL tied up with IDFC to bid for two contiguous national highway projects on NH-6 in Chhattisgarh and Maharashtra.

The National Highways Authority of India (NHAI) awarded both the projects to the ABL-IDFC consortium. The combined project cost of the projects was Rs. 1115 crore of which Rs. 320 crore was to be funded by equity, Rs. 785 crore through debt and Rs. 10 crore through an NHAI grant. IDFC held a 10% equity stake in each project.

The challenge:
The consortium won the bid around the same time that the global financial meltdown began. As a result, one of the key challenges faced by them was raising the equity in a market that had turned over-cautious. At this time it seemed like an uphill task to solicit proposals from equity investors to take equity stakes in the projects. Structuring and syndicating the debt portion of the Rs. 1,115 crore needed for the project was another challenge.

IDFC's ‘one firm’ solution:
Setting up an example of how IDFC’s different businesses work as one whenever the opportunity arises, IDFC took the lead in structuring the debt and IDFC-Capital successfully syndicated the debt for the projects during the peak of the financial crisis in 2008-2009. IDFC-Capital also assisted ABL in soliciting proposals from equity investors to take equity stakes in the projects. The India Infrastructure Fund (IIF), managed by IDFC Project Equity, offered the most competitive terms to ABL and acquired a 43.3% stake in each project. IDFC Private Equity also holds a 15.62% stake in ABL.

As a result of this joint effort by IDFC, IDFC Capital, IDFC Project Equity and IDFC Private Equity, ABL was able to begin working on a capital intensive project right in the middle of a global recession and implement it successfully.

How it worked at IDFC

  • IDFC: lead in structuring debt
  • IDFC Capital: Debt syndication and soliciting proposals from equity investors
  • IDFC Project Equity: Acquired stake in each of the two projects on competitive terms
  • IDFC Private Equity: Holds stake in ABL

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Safe harbor
IDFC, through its verticals has helped Gujarat Pipavav Port Ltd. to
complete port infrastructure improvement, which are now comparable with competing ports

The case:
Gujarat Pipavav Ports Ltd. (GPPL) operates a multipurpose port at Pipavav, Gujarat with a container and bulk capacity of 6 lakh TEUs per annum and 5 million metric tonnes per annum. IDFC has partnered the company since 2005 and has facilitated the financing of the project both through debt and equity. Currently, IDFC Private Equity is the second largest shareholder with 14.23% stake after investing a total of Rs. 192 crore in the Company through IDFC Infrastructure Fund I & II.

The challenge:
In 2005, GPPL needed finance to develop and expand the port. IDFC stepped in then and provided debt worth Rs. 445 crore towards this project. In FY2010, GPPL, in consultation with IDFC, reassessed the business plan, the revised project cost estimates, and the funding requirement for the project. The reassessed value was pegged at Rs. 1,200 crore. While IDFC underwrote and successfully arranged a debt of Rs. 1,000 crore the remaining amount had to be raised through an IPO. Another challenge was to syndicate the bulk of the Rs. 1,000 crore debt through a lender’s consortium.

IDFC's ‘one firm’ solution:
While IDFC Ltd. underwrote and successfully arranged for the Rs. 1,000 crore debt, IDFC Capital coordinated the debt syndication exercise with IDFC Limited acting as the lead bank amongst 7 banks and finance institutions (FIs) in the lender’s consortium. The legal due-diligence, including common loan documentation for the consortium, was led by IDFC’s legal team.

The IPO process for GPPL is being handled by IDFC Capital and the company plans to raise Rs. 500 crore through the IPO. The smooth coordination between IDFC Capital, IDFC Legal and their parent company, IDFC Ltd., has made GPPL a success story, where its IPO has got a 4/5 rating by CRISIL, which means that this is an above average offering.

How it worked at IDFC

  • IDFC: underwrote and arranged for Rs 1,000 cr debt
  • IDFC Capital: Coordinated the debt syndication exercise and handled the IPO process
  • IDFC Legal: Legal due-diligence, including common loan documentation for the consortium

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Wind beneath the wings
GIL's acquisition of a high quality portfolio of wind-farms was possible
only because of the seamless partnership between 4 IDFC verticals

The case:
Green Infra Ltd. (GIL) was set up by funds managed by IDFC Private Equity with the objective of becoming India's leading renewable energy-focused independent power producer. In May 2009, GIL successfully bid for a 99.4 MW portfolio of wind farms owned by BP Energy (India) Private Limited, edging out strong competition from several larger companies for this prestigious portfolio.

The challenge:
GIL was a typical mid-cap company and one of the key challenges was financing the deal. BP Energy was also keen on closing the deal as soon as possible, the tight timeframe posing an added challenge for GIL. Another key consideration that BP put on the table was that of a fully funded bid. Since GIL was a relatively new player in this sector, these considerations posed as a major hurdle to a successful bid.

IDFC's ‘one firm’ solution:
IDFC Private Equity was already involved with GIL when it bid for these wind-farms. On winning the bid, IDFC Project Finance partnered GIL and IDFC Private Equity to structure and fully underwrite the entire non-recourse long term loan of Rs. 345 crore. This amount included securitisation of carbon emission receipts, receivables of Rs. 25 crore and sub-debt of Rs.15 crore.

IDFC Project Finance also supported this landmark transaction by providing full debt financing. Subsequently, IDFC Capital played a vital role in syndicating the loan to Indian Renewable Energy Development Agency and Axis Bank.

GIL's acquisition of these wind-farms was possible in an accelerated timeframe only because of the seamless partnership between IDFC Private Equity, IDFC Project Finance and IDFC Capital. Not only has the transaction allowed GIL to establish its leadership in the renewable energy sector but BP has achieved one of its objectives; transitioning the ownership of these wind-farms to an environmentally sensitive partner.

How it worked at IDFC

  • IDFC Private Equity: Involved in the bid process with GIL
  • IDFC Project Finance: Structured and fully underwrote the entire non-recourse long term loan. Provided full debt financing.
  • IDFC Capital: Syndicated the loan to Indian Renewable Energy Development Agency and Axis Bank.

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Highway to success
IDFC Projects and IDFC Capital partnered together to give PLUS Expressways Berhad a head start to acquire a stake in Indu Navayuga
Infra Project Pvt. Ltd.

The case:
IDFC Projects and PLUS Expressways Berhad (PLUS) have been working together on road projects in India for over 15 months. The IP - PLUS JV has submitted RFQs for three projects and are exploring opportunities to bid jointly for future projects in India. In one of the meetings held with the PLUS top management, IDFC Projects was told of PLUS' desire to scout for acquisition opportunities with companies in the Indian Build Operate and Transfer (BOT) road space.

The challenge:
Since PLUS was a new entrant in the Indian space it was difficult for them to zero-in on the right company to buy a stake. The company also needed help from an Indian company to acquire highway projects and advise them on proposed acquisitions.

IDFC's ‘one firm’ solution:
IDFC Projects appraised PLUS about the credentials of IDFC Capital and set up preliminary meetings between IDFC Capital and PLUS teams. IDFC Capital then helped PLUS in acquiring a highway project and successfully closed the deal.

Following this, PLUS mandated IDFC Capital Limited to advise them on their proposed acquisition of equity in Indu Navayuga Infra Project Pvt. Ltd. (INIPPL). The investment banking team was responsible for the detailed evaluation of INIPPL that consisted of assessing the target’s business plan and financial model, coordinating traffic, legal and accounting due diligence with various agencies, structuring the transaction to mitigate various risks and negotiating the price, transaction structure and key covenants in the transaction documents on behalf of PLUS with the existing shareholders of INIPPL.

During the course of the transaction, the investment banking team made presentations to PLUS and its Board on valuations, transaction structure and negotiation strategy in order to provide them with the right perspective in evaluating the transaction and facilitate the decision making. The transaction documents were signed in January 2010.

This was an example of how IDFC's two verticals were able to help a company not only set up operations in India but also make an acquisition and win orders in the infrastructure space.

How it worked at IDFC

  • IDFC Projects: Appraised PLUS about IDFC Capital's credentials and set up preliminary meetings between them
  • IDFC Capital: Helped PLUS in acquiring a highway project and successfully closed the deal. It also advised and evaluated a proposed acquisition of equity in Indu Navayuga Infra Project Pvt. Ltd. (INIPPL).

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Right call
Quippo's soft telecom infrastructure business got a boost thanks to
IDFC's timely financial interventions

The case:
In March 2007, IDFC saw the potential for growth in the passive infrastructure business underpinned by strong subscriber additions in the world's fastest growing mobile telecom market. IDFC Private Equity was an early investor in Quippo Telecom Infrastructure Limited (QTIL), one of India's leading independent tower operators.

The challenge:
Quippo was a new company in a nascent segment. Therefore, initial capex was the first hurdle that had to be crossed. The next obstacle was the financing to support the company's growth plans through the acquisition of equity stake and subsequent de-merger of the tower assets in Wireless TT Info Services Ltd. (WTTIL). The third challenge for the company was to form a common shareholder block to sustain their growth plans. A highly leveraged balance sheet also needed support in terms of long-term funding.

IDFC's ‘one firm’ solution:
IDFC, along with IDFC Private Equity and IDFC Project Finance came together to overcome the challenges faced by Quippo. While IDFC Project Finance lent Rs. 100 crore as a project finance loan to fund the initial capex of Quippo, IDFC Private Equity infused equity of Rs. 128 crore in the second round to support the company's growth plans.

In the financial year 2009-10, IDFC Project Finance supported Quippo's acquisition of equity stake and subsequent de-merger of tower assets in Wireless TT Info Services Limited (WTTIL), by lending Rs. 350 crore. IDFC not only assisted Quippo in partnering with the Tata Group but also helped it to become one of the largest passive telecom infrastructure providers with the highest tenancy levels in the Indian market.

During the year FY10, IDFC Private Equity also took direct equity stake by investing Rs. 250 crore in WTTIL to form a common shareholder block with Quippo.

To support WTTIL's growth plans and to meet its high capex requirement, IDFC Project Finance lent a Rs. 500 crore short-term loan and Rs. 650 crore long-term loan. IDFC Private Equity infused Rs. 98 crore during the rights issue while IDFC Project Finance invested Rs. 250 crore as preference equity in WTTIL to meet its long term funding plans and support its highly leveraged balance sheet. Thus, IDFC along with its Private Equity and Project Finance arms supported Quippo-WTTIL to the extent of Rs. 2302 crore and played a major role in putting Quippo on the high-growth path.

How it worked at IDFC

  • IDFC - IDFC assisted Quippo in partnering with the Tata Group and become India's largest independent passive telecom infrastructure provider.
  • IDFC Project Finance - Lent Rs. 1850 crore over a period of time to support Quippo's growth and acquisition plans.
  • IDFC Private Equity - Gave the company equity support to the tune of Rs 452 crore over a period of time.

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