IL&FS appoints A&M and two financial consultancies to help restructure

24 October 2018

In light of its massive debt levels amounting to nearly $12.5 billion, the Infrastructure leasing and Financial Services (IL&FS) entity of India has turned to the consulting industry for support with debt restructuring. The board has selected Alvarez & Marsal for its restructuring efforts, alongside Arpwood Capital and JM Financial Consultants for its debt resolution.

The IL&FS is one of the most expansive entities in India, with operations stretching across nearly 350 subsidiaries. In mid-September, revelations that the entity had defaulted on several payments led to grave concern across Indian markets leading to substantial dips in the stock market.

Briefly, IL&FS is an investment firm that operates with a large network of subsidiaries that specialise in the domains of investment and infrastructure. The entity is jointly owned by several companies, although the majority shareholders are LIC and ORIX Corporation, both of which own approximately 25% each in shares.

Financially, IL&FS has been struggling with a large pool of outstanding debt, amounting to approximately $12.4 billion. The firm has failed to make loan and interest repayments on a number of its bank loans, and received a number of notices for defaults relating to its inter-corporate deposits.

IL&FS appoints A&M and two financial consultancies to help restructure

Since the stock market plummeted after the firm’s finances were exposed, the government initiated legal proceedings to take control of Il&FS operations, to which end it replaced the entity’s board with government officials. The firm appointed also began appointing a number of consulting firms to support with the resolution process. 

The first of these appointments was global financial services and consulting firm Alvarez & Marsal to help with restructuring the operations at IL&FS. Restructuring & Turnaround is one of the firm’s core service areas, in addition to other relevant expertise in corporate performance improvement and investigations.

For support with the financial aspect of operations – primarily with the debt resolution – the firm has now appointed two financial services firms, namely JM Consultants and Arpwood Capital. The former is based in Mumbai and offers a wide range of services in asset, wealth and portfolio management.

Arpwood Capital, on the other hand, is an investment banking company, which advises clients on a number of crucial actions including mergers & acquisitions, capital raising, with its clientele primarily consisting of private equity and investment firms. Both firms will currently be engaged in a broad pool of business, primarily due to the large number of non-performing loans and assets currently prevalent in the Indian market.