Ajay Piramal-led Piramal Enterprises Ltd is gearing up to launch a fund with a corpus of Rs 6,000 crore (about $887 million) for distressed assets, according to a report by The Economic Times.
The company has joined hands with Nirmal Gangwal, managing director and founder of Brescon Corporate Advisory, who will bring in 10 per cent of the capital for the planned Piramal India Resurgent Funds. Gangwal will also head the new fund as CEO.
The fund will seek to invest in potential turnaround companies and provide rescue capital, Gangwal told the paper.
The fund can also target assets being sold under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, which allows banks to sell security pledged with them, the report said.
The move comes at a time when banks are expected to speed up the process to offload bad loans after the Reserve Bank of India nudged them to clean up their books. The stressed loan book of commercial banks in India is estimated at Rs 7 lakh crore.
In June last year, the RBI allowed lenders to seize control of a company if a debt restructuring fails and sell their stake in the defaulting firm to recover dues under its strategic debt restructuring (SDR) guidelines. The step was aimed at reining in willful defaulters and curbing bad loans.
Banks have already initiated SDR measures in several companies including Gammon India, Monnet Ispat, IVRCL, Electrosteel Steels Ltd, Lanco Teesta Hydro Power Pvt Ltd, VISA Steel Ltd and Jyoti Structures Ltd.
Piramal Enterprises’s fund and asset management arm, Piramal Capital, manages assets close to Rs 22,000 crore with investment strategies for real estate, infrastructure and other segments.