| INDIA BUILT OUT FUND - I |
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The India education market at around $80bn has the Govt. spending around $30bn (3.7% of GDP) with the private sector accounting for the balance, with overall spend on education at around 7% of the private consumption expenditure in India. Similarly healthcare is one of India’s largest sectors, in terms of revenue & employment, with a total value of around $57bn, representing around 5.6% of GDP with growth projections at over 15% CAGR till 2012. Govt spends on healthcare account for only 20% of this sector, throwing up large inadequacies in India’s healthcare infrastructure & services.
Thus both these sectors offer extremely attractive investment opportunities across the entire value chain in basic/higher education, training & skills development in the education sector and due to increasing population & lifespan, rising household income & affluence, changing disease profile, availability of adequate health insurance & increased medical travel, the healthcare & allied services sector also poses a huge opportunity to invest.
Both sectors being recession proof and fairly un-represented in the stock market, provide ample opportunity for private equity investments to provide attractive returns in due course.
PRIMARY FOCUS AREAS
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Education & Skills
- Education service providers
- -Education service providers
- -Test Preparation
- -Colleges
- Finishing Schools - e.g. Teacher Training, Nursing Schools
- Content providers
- Excellent corporate governance.
Healthcare, Allied Services & Wellness
- Hospitals, Specialised Clinics
- Diagnostic Chains
- Medical Devices & Consumables
- Pharmacies & Niche Pharma products
- Healthcare Technology
SECONDARY FOCUS AREAS
- Infra Ancillary & Consumption
- Facilities Management
- -Security Services
- -Housekeeping
- -Food Services
- Logistics
- Media
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RATIONALE FOR INVESTING IN EDUCATION & HEALTHCARE
Common characteristics of the two sectors |
- Demand-Supply gap is large, hence sectors will witness investments and growth over the next few years
- Diagnostic Chains
- Inadequate Government infrastructure
- Price inelastic segments, hence not affected significantly by economic slowdown
- Domestic demand driven, hence shielded from global turmoil
- Underrepresented in the stock market and hence underinvested, because of lack of options
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MILESTONE FUND, LLC
Warehouse Development focused Real Estate Fund
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| The logistics sector in India is key to India's overall growth. Investing in the logistics sector will unlock value such that India can continue to experience annual GDP growth rates in excess of 7.5% per annum. According to a warehousing sector report by Cushman and Wakefield the Indian warehousing sector is expected to grow from US$ 20 billion in 2007-08 to about US$ 55 billion by 2010-11, growing at a rate of 35-40 per cent every year. The growth potential for this sector is huge, as about 45 million sq ft of warehousing space, along with approximately 110 logistics parks are likely to come up in India by 2013. |
| Characteristics of India warehousing sector today: |
- Unorganized sector in need of information technology infusion and management systems;
- Fragmented market with not a single one-stop shop for regional or national level standardized and high-quality warehouse;
- Demand ahead of supply evidenced by waiting periods between 6 to 12 months in areas near Delhi, Mumbai, Chennai and other leading consumption centers.
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A warehouse once built, is a high-quality income generating asset and current cash-on-cash yield assuming that the fund participates at land acquisition stage varies between 18% to 24%, depending on the region in the country. Milestone Fund, LLC is bullish on the prospects of realizing high quality returns through investments in the warehousing space. Our investment discipline based on acquiring land at prices as low as $5 to $10 per square foot places us in a position to realize IRR's greater than 25%.
The Fund makes investments primarily in equity and equity-linked instruments the warehousing space in India. From a geographic perspective, the Fund invests primarily in emerging consumption centers, which are usually in the vicinity of Tier I cities such as Mumbai, Delhi, Bangalore, Chennai, Kolkata, and some Tier II centers such as Mysore, Coimbatore, Pune, Ahmedabad, Hyderbad, etc. Milestone's investing principles revolve around low land acquisition cost and also around the presence of supporting infrastructure, which is amenable to the development of a well planned logistics park.
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| IL&FS MILESTONE FUND - I
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| The Scheme focuses primarily on investing in yield driven real estate assets across cities in India. The main objective of the Scheme will be to invest in companies which will own, lease and later exit quality Office buildings, Warehouses, Hotels, Hospitals, IT & ITES Projects and retail spaces that are attractive to quality tenants/users.
The Fund has appointed IL&FS Milestone Realty Advisors Private Limited as Investment Advisor for the purposes of advising the business affairs of the Scheme. It is co promoted by IL&FS Investment Managers Limited and Milestone Group.
The fund has so far made positive quarterly yield distribution averaging at around 11% annualized yields (pre tax),
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| IL&FS MILESTONE FUND - II |
| Subsequent to the first fund’s immense success, the second series of this Rental Yield Fund was launched. The scheme’s endeavour is to invest in properties which are completed and rented out, eliminating the risk attached to real estate development and minimizing leasing risk. The scheme will focus on the following three verticals: |
- Warehouses (Industry neutral, Specialized, Agricultural & Cold Storage)
- Commercial Buildings & IT Buildings in Maharashtra – Top quality select buildings with stable tenants
- Others (Multiplexes, Banks)
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| Brief Info: |
| The Following features distinguish IL&FS Milestone Fund II from other current offerings in the market: |
- Quarterly Yield Distribution to the investors.
- Excellent Past Performance of similar structured fund ( Delivered past positive Quarterly Payouts, and has shown appreciation in property valuations) (Reports available on request)
- Investment in Rental properties hence no development risks.
- Competent in House Project & Nurturing Team.
- A strong team of investing and operating professionals managing the fund.
- True proprietary deal flow through our personal network and corporate relationship.
- Excellent corporate governance.
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| MILESTONE DOMESTIC SCHEME - II |
Milestone Domestic Scheme - II or MDS-II is the successor to the successful MDS-I,both of which are funds raised from investors in India in Rupee denomination. Key focus areas of the fund would continue being in quality affordable housing & strategic warehousing projects. The fund is currently into its investment stage.
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| SPECIAL OPPORTUNITIES FUND - I |
- Target size Rs. 400 cr (US$ 90 mn)
- Promoter contribution Rs. 20 cr (US$ 4.50 mn)
- Innovative structures with adequate collateral to protect capital while seeking superior returns
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| Target Industries |
- Infrastructure, Engineering & Construction
- Infrastructure Adjunct
- Manufacturing
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| BLUE OCEAN MARITIME FUND |
- Milestone proposes to enter into a Joint Venture with Mercator to invest in Dry bulk shipping vessels
- Focus on India China growth driven by Coal & Iron Ore demand
- Opportunity to invest in current discounted vessels prices and also generate regular charter income
- Target Fund Size - US$ 100 mn; Hardcap - US$ 200 mn
- Sponsor commitment of 10% of the fund size
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| Investment Objective |
The objective of the fund is to generate superior capital appreciation through smart vessel acquisitions and flexible sale at an opportunistic market time thus resulting in an ideal asset play. The fund will also look at consistent risk adjusted returns by investing in yield driven shipping assets. |
| Top Quality Assets |
The fund will own shipping vessels with an average age of 5-7 years. Targeted vessels to produce a high, stable income over the medium term with an opportunity to drive attractive charter income and capital gains at the time of exit. |
| Chartering Strategy |
- Long Term Charter upto 60%
- Short Term / Spot Charter restricted to 50%
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| Leveraging on Mercator Strong Clientele |
Existing long Term Charters with prominent end user clients such as Arcelor Mittal, Tata Power, Cargill, Glencore, Cosco. |
| In-house asset management |
Day to day management and providing operational & technical management expertise to the business. This will also ensure maintaining the asset quality for better realization at the time of sale of the asset. |
| Leverage |
The fund will utilize leverage upto 70% loan-to-value |
| MERCATOR GROUP |
- 2nd largest Private sector Indian Shipping company with March 2009 revenues in excess of US$ 450 mn and a fleet of 29 vessels and 1 Jack-up Rig
- Incorporated in 1983. Listed on NSE & BSE in India and subsidiary listed in Singapore
- Capacity tonnage expanded from about 1M DWT to about 2.3M DWT over the last five years
- Prominent clients include Arcelor Mittal, Vale, COSCO, British Gas, Indian Oil Corporation, ONGC, Tata Power, Cargill and Glencore.
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