Mumbai: Leading financial institutions (FIs) like Industrial Development Bank of India (IDBI), Industrial Financial Corporation of India (IFCI) and Hyderabad Bank have roped in Armedas, a Mumbai-based financial consortium, to sell the sticky assets of their defaulters to be acquired under the Securitisation Act.

The FIs and the bank have asked Armedas to start proceedings to acquire and sell assets of their four major defaulters in Ahmedabad, Chennai and Andhra Pradesh as early as possible. The total worth of these assets are estimated at over Rs 500 crore.

Armedas is a financial consortium that includes Megharaj Financial Services (an investment bank), Dalal Mott MacDonald, NA Shah Associates and Chesterton Meghhraj Property Consultant. They will assist the lenders to acquire the assets of the defaulters and to sell the same to a third party.

The consortium will also provide a comprehensive and complete range of asset valuation and recovery services under the Securitisation Act. Armedas is made up of functional specialists with expertise in the fields of investment banking, debt restructuring and partner search.

Says Meghraj Financial Services managing director A S Anand Kumar: “Currently we are working on four different asset acquisition projects for IDBI, IFCI and Hyderabad Bank — two in Ahmedabad, one in Chennai and the other in Hyderabad. Three more projects are in the offing.” He is, however, reluctant to reveal the names of these defaulters.

He says the effectiveness of similar kinds of consortium has been increasing by the promulgation of the Securitisation Act, which enables FIs and banks to seize the assets of defaulters and recover their dues by hawking their assets. The bad debts of banks now total over Rs 1,10,000 crore.

Elaborating the modus operandi of Armedas, Kumar says Chesterton Meghraj will act as the broker for the property sales, while the valuation of these properties will be carried out by engineering consulting firm Dalal Mott MacDonald. NA Shah Associates will suggest tax-effective means of going ahead with the transaction while Meghraj will find a suitable buyer by using its international network.

Armedas has worked out two models for the sale of these assets — either the property could be sold separately or the company, along with its underlying assets, could be sold.