India’s IL&FS Built a Road to Riches for Some

India’s IL&FS Built a Road to Riches for Some

It was buried in plain sight, in footnote No. 8 on page 28 of an IPO prospectus. But nobody in September 2009 was paying attention to that particular disclosure.

And certainly not with any misgivings: Six months later, IL&FS Transportation Networks Ltd., which housed the road assets of a pioneering Indian infrastructure finance, construction and management group, would see demand for 33 times the shares on offer.

Fast forward a decade, and the IL&FS Group is insolvent with $12.5 billion in unpaid debt. Credit analysts are doing a postmortem now, and finding clues that investors missed. The biggest of all was an employee welfare trust, whose name kept cropping up in filings.

The IL&FS Employees’ Welfare Trust, which owns 12 percent of unlisted parent Infrastructure Leasing & Financial Services Ltd., benefited a small group of senior staff. Read More

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