Global funds looking to buy $120-bn stressed assets from Indian banks: report
05 April 2016
Global firms such as JC Flowers & Co and Apollo Global, looking to cash in on an impending clearance sale of distressed assets worth an estimated $120 billion by banks in India, are keenly awaiting the clean-up act, according to reports.
In fact, JC Flowers has recently announced a joint venture with financial services group Ambit Holdings to set up an asset reconstruction company (ARC) according to a Reuters report.
The joint venture will focus on small-and-mid-cap companies, aiming to build $1 billion in assets under management in India, said Rahul Gupta, joint group CEO at Ambit.
Apollo Global Management, which has set up an $825 million fund in India in a partnership with top private sector lender ICICI Bank's private equity arm, is weighing various options.
JC Flowers, which has invested over $14 billion across several countries and recently set up a distress-debt fund in India. Is looking at banks that have been ordered to clean up an estimated $120 billion of bad and troubled loans.
Bad loans in India, Asia's third-largest economy, jumped by nearly a third to around Rs4,00,000 crore ($60.3 billion) late last year after the reserve Bank revised norms for considering bank's advances as bad or stressed and ordered an immediate clean-up of banks' balance sheets.
That figure doubles to a record amount when restructured loans are included and now constitutes 11.3 per cent of all loans, according to the government.
RBI governor Raghuram Rajan wants lenders to fully disclose and provide for all problem loans by next March and troubled asset buyers see an opportunity here as banks could consider selling off chunks of bad loans to specialists to free up capital.