Struggling non-banking finance company IL&FS is selling commercial properties in GIFT City to address its debt crisis. With over 540,000 sq ft in GIFT TWO, the sale includes 58 offices, with four already leased to Tata Consultancy Services. IL&FS, facing a liquidity crisis since 2018, aims to resolve debts exceeding INR 56,000 crore. Recent updates show progress, including the sale of its Mumbai headquarters to Brookfield Asset Management. GIFT City's growth, buoyed by government initiatives and private interest, attracts over 500 entities, including fintech firms and banks, signalling its emergence as a prominent financial hub.
To address its financial challenges IL&FS, has announced plans to sell commercial properties spanning over 540,000 square feet in GIFT City's office tower, known as GIFT TWO. The properties, owned by Sabarmati Capital Two Ltd (SCTL), a subsidiary of IL&FS Township & Urban Assets Ltd (ITUAL), will undergo a sale process called the Swiss Challenge.
IL&FS aims to sell 58 commercial offices spread across 21 floors of the tower, along with parking spaces, as is. Notably, four of these offices, covering 115,000 square feet, are already leased to Tata Consultancy Services. The initiative marks IL&FS's efforts to contact potential buyers and monetise its real estate assets amid its debt resolution process.
SCTL, established to develop commercial spaces in GIFT City, has successfully constructed two towers covering a combined area of over 1.61 million square feet. While GIFT ONE has been operational since 2013, GIFT TWO commenced operations in 2016. GIFT TWO comprises a basement, ground floor, and 28 upper floors, totalling 0.8 million square feet. Although the land belongs to GIFT City, IL&FS subsidiaries own the buildings, having secured a 99-year lease starting from 2013.
IL&FS has been proactively selling assets to manage its debt obligations, following its failure to meet repayment obligations in September 2018, which triggered a liquidity crisis in India's non-banking finance sector. Subsequently, the government intervened, replacing IL&FS's board to initiate a cleanup process.
Recent updates reveal that the IL&FS Group has addressed debts exceeding INR 56,000 crore, with INR 36,000 crore discharged across its subsidiaries, while maintaining an overall resolution target of INR 61,000 crore. In 2022, Brookfield Asset Management secured the successful bid to acquire IL&FS' headquarters in Mumbai's Bandra-Kurla Complex for over INR 1,080 crore, signifying progress in IL&FS's asset monetisation efforts.
Furthermore, the Central Board of Direct Taxes (CBDT) clarified in July that non-resident investors won't face taxation on income from offshore investments routed through an Alternative Investment Fund (AIF) set up in an International Financial Services Centre (IFSC).
Moreover, the Gujarat government's recent decision to exempt GIFT City from its 63 year liquor prohibition law aims to attract foreign investment to the burgeoning financial hub.
GIFT City has witnessed significant growth, spurred by government initiatives and increasing interest from private entities. Hosting over 500 entities, including banks, fintech firms, and stock exchanges, along with more than 60 alternative investment funds, GIFT City has become a focal point for financial activities. Additionally, it houses India's first bullion exchange, with over 100 qualified jewellers onboard, solidifying its position as a leading financial center in the region.
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