BLACKSTONE GROUP MULLS SETTING UP ARC IN INDIA

Global private equity major Blackstone Group is exploring setting up an asset reconstruction company (ARC) in the country to tap the opportunity thrown up by India’s bad loans approaching ₹10 lakh crore, two people aware of the development said.

“Blackstone is keen on the stressed assets space in India. They have been assessing the opportunity for some time and are in talks with experts in the field for the same,” said one of the two people cited above, requesting anonymity as the talks are private.

“As a matter of policy, Blackstone does not comment on media speculations,” a Blackstone spokesperson said in an email response to a Mint query.

In June, the Reserve Bank of India named 12 large defaulters and asked banks to initiate insolvency proceedings against these companies under the Insolvency and Bankruptcy Code. These 12 companies accounted for almost a quarter of the bad loans in the banking system. The list includes names such as Monnet Ispat Ltd, Alok Industries Ltd, Amtek Auto Ltd and Essar Steel Ltd.

If Blackstone indeed sets up an ARC, it will be the latest among foreign private equity investors who have spotted the opportunity in stressed assets.

In January, Mint reported that AION Capital Management Ltd, a joint venture between ICICI Bank Ltd and Apollo Global Management, has applied for a licence to form an ARC. US-based stressed asset specialist Lone Star Funds too has applied to the RBI to set up an ARC in India, Mint reported in November.

Global PE funds such as KKR and Co, Hong Kong-based SSG Capital Management and International Finance Corp (IFC) have acquired stakes in existing ARCs. In January 2015, IFC invested in Encore Asset Reconstruction Co Pvt Ltd, while in March 2016, private equity major KKR & Co picked up a stake in International Asset Reconstruction Co Pvt. Ltd.

Others who have applied for setting up ARCs are global stressed asset specialist JC Flowers and Co, in partnership with Ambit Holdings Pvt. Ltd, domestic financial services firm IIFL Holdings Ltd and Sudhir Valia, the former chief financial officer of Sun Pharmaceutical Industries Ltd.

BLACKSTONE, WHICH MANAGES $90 BILLION IN CREDIT GLOBALLY, WILL MAKE THE INVESTMENTS FROM A FUND MANAGED BY ITS SPECIALISED TACTICAL OPPORTUNITIES GROUP