Edelweiss ARC to raise around $300M to buy stressed assets

By Anuradha Verma

  • 17 Mar 2016

India's largest asset reconstruction company Edelweiss Distressed Asset Resolution Business (EDARB) is looking to raise a further capital of around Rs 1,000- 2,000 crore (appropriately $300 million), as a lot of bad assets are likely to put on the block next year following the Reserve Bank of India (RBI)'s decision to carry out an asset quality review.

Currently, EDARB has a market share of approximately 40 per cent with assets under management of Rs 25,000 crore.

“With enactment of the bankruptcy code, more overseas investors are expected to come and invest in the asset reconstruction space,” Edelweiss ARC's managing director and CEO Siby Antony told PTI.

It may be noted that in Budget 2016-17, Finance Minister Arun Jaitley said a comprehensive bankruptcy code will be enacted and legislation brought in to deal with illicit deposit taking schemes. The proposed law aims to reduce delays in resolution of insolvency cases and improve recovery of amount lent to companies.

"Budget has brought in more clarity on the bankruptcy code and we will see foreign funds coming into the country," he said.

Between September and December quarters, 37 listed banks added a whopping Rs 1 trillion in fresh NPAs, taking the total stressed assets to over 12 per cent or Rs 4.34 trillion.

“Edelweiss ARC has bought Rs 5,000-6,000 crore of bad loans and around 500 portfolios to date,” Antony said.

Recently, Kotak Mahindra Group said it has signed an agreement with Canada Pension Plan Investment Board (CPPIB) to invest up to $525 million (about Rs 3,500 crore) in stressed assets in the country’s banking and corporate sectors. Of this, CPPIB will have the ability to invest up to $450 million.

US private equity firm JC Flowers & Co is floating a joint venture with Ashok Wadhwa-led investment bank Ambit Holdings Pvt Ltd to acquire stressed assets in India. Last month, financial services firm SREI Alternative Investment Managers Ltd, part of Kolkata-based SREI Group, said it was looking to float a Rs 2,000 crore fund to invest in debt instruments of stressed companies.

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