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New investors scout for options in stressed assets

LiveMint logoLiveMint 04-09-2017 Swaraj Singh Dhanjal

Mumbai: As the distressed debt resolution process picks up steam with several cases being referred to the National Company Law Tribunal (NCLT), a number of new investors have started scouting for opportunities in the Indian stressed assets space, three people aware of the developments said.

The stressed assets opportunity has drawn interest from several new financial investors such as American asset manager Cerberus Capital Management and Hong-Kong-based firm Pacific Alliance Group, according to the people mentioned above.

“Given that several non-performing assets (NPA) cases have been referred to the NCLT and have seen the appointment of insolvency resolution professional to chart out a resolution plan for these assets, several new investors have started to look more seriously at the opportunities,” one of the people cited above said, requesting anonymity as the talks are private.

Investors are looking at various strategies, from acquiring non-performing debt to controlling stakes in companies or assets that fall out of some of the larger companies as part of debt resolution plans, the person added.

India’s central bank in June asked banks to move NCLT to kick-start insolvency and bankruptcy proceedings against 12 large accounts including Bhushan Steel Ltd, Electrosteel Steels Ltd, Lanco Infratech Ltd, Alok Industries Ltd and Jyoti Structures Ltd. These 12 accounts alone constitute a quarter of the over Rs8 trillion of NPAs.

On 30 August, Mint reported that the Reserve Bank of India (RBI) had sent commercial banks a second list of at least 26 defaulters with which it wants creditors to start the process of debt resolution before initiating bankruptcy proceedings.

Cerberus Capital Management, founded in 1992, manages over $30 billion in assets across various strategies including distressed debt, private equity, mid-market lending and real estate. Headquartered in New York, the firm has offices across Europe and Asia.

Hong-Kong-based Pacific Alliance Group manages close to $18 billion in assets under management across private equity, real estate and other strategies.

Cerberus Capital Management declined to comment. Emails sent to Pacific Alliance Group on Friday did not elicit any response.

These new investors join several others such as SSG Capital Management, Bain Credit, Lone Star Funds and Oaktree Capital who have already made commitments to investing in the Indian distressed debt opportunity.

SSG Capital, an Asia-focused special situations investment firm founded by former Lehman Brothers executives, which already has exposure to stressed assets in India, is raising close to $2 billion across two Asia-focused new funds, Mint reported in July.

In August, Mint reported that Oaktree Capital Management LP, one of the largest special situations and distressed assets funds in the world, has hired former JPMorgan executive Gaurav Parasrampuria as vice-president to look into the Indian market.

Infrastructure Leasing and Financial Services Ltd (IL&FS) in February announced that it has partnered with global private equity firm Lone Star Funds to jointly invest around $550 million in stressed infrastructure projects in India.

Last week Mint reported that Kumar Mangalam Birla controlled Aditya Birla Capital Ltd will be looking at raising a distressed assets fund as part of its asset reconstruction company.

Last year, billionaire Ajay Piramal-led Piramal Enterprises Ltd announced a $1 billion distressed asset investment platform in association with private equity fund Bain Capital Credit.

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