Axis Asset Management Co Ltd, promoted by private sector lender Axis Bank, and Inversion Advisory Services, promoted by telecom sector veteran Akhil Gupta, on Tuesday said that they have entered into a partnership to invest in underperforming companies.
They plan to raise up to Rs 3,500 crore for the proposed new fund. An application has been filed with SEBI seeking registration for the proposed fund. The fund will be sector-agnostic and have a base size of Rs 3,000 crore with a green shoe option to raise an additional Rs 500 crore.
The partners aim to acquire controlling stake primarily in pre-stressed, stressed, distressed and other underperforming assets, the statement said.
"It will be a unique first of its kind offering that will look to take controlling equity stakes in underperforming companies before working with them to turn them around," the statement said. It will thus help such quality companies with strong performance and operational capabilities which may be facing temporary headwinds owing to special circumstances including unsustainable debt, temporary disruptions, etc. to get on a credible turnaround path, it added.
“It gives me great pleasure to see Axis AMC tying up with Inversion group to tap into the unique opportunity of turnaround investing and I strongly believe that together we can create an offering that can help investors participate profitably in this asset class. The addition of this new capability will also take us forward on our path of creating a market leading alternatives platform within the AMC," said Amitabh Chaudhry, MD & CEO, Axis Bank.
The partnership seeks to help fill the shortage of high quality equity capital in the country’s stressed company ecosystem, which has seen a number of debt offerings but lacks strong equity investors with an operational skill set.
Axis AMC, the investment manager of the fund, will employ a team to evaluate potential opportunities. Inversion would provide management support to acquired companies with its team of functional industry experts.
“The combination is ideal to not just exploit large untapped potential in this space but also serve an important social purpose in saving a large number of jobs and capital already invested by shareholders, lenders and vendors in such companies," said Akhil Gupta, chairman, Inversion Advisory Services.