Ko­tak Mahin­dra launches $525m stressed as­set fund with CPPIB

The Pak Banker - - COMPANIES/BOSS -

MUM­BAI: Ko­tak Mahin­dra Group has tied up with Cana­dian Pen­sion Plan In­vest­ment Board (CPPIB) to launch a $525 mil­lion fund to in­vest in the stressed as­set mar­ket in In­dia. The Cana­dian pen­sion fund man­ager will have the op­tion to in­vest up to $450 mil­lion in this part­ner­ship, Ko­tak Mahin­dra Group said in a state­ment on Mon­day.

"This in­vest­ment will ad­dress the grow­ing op­por­tu­nity aris­ing from the cur­rent stress in the In­dian bank­ing and cor­po­rate sec­tors," the state­ment said.

The fund has a flex­i­ble in­vest­ment man­date-pro­vid­ing fi­nanc­ing so­lu­tions to com­pa­nies in ad­di­tion to in­vest­ing in stressed as­set sales by banks with the aim to re­struc­ture, re­cover and turn around com­pa­nies in dis­tress-it added.

"Through this agree­ment, CPPIB will se­lec­tively in­vest in as­sets that we be­lieve will de­liver value in line with our long-term in­vest­ment man­date," said Adam Vigna, man­ag­ing di­rec­tor, prin­ci­pal credit in­vest­ments, CPPIB.

On 22 Jan­uary, Mint had re­ported that Ko­tak Mahin­dra Group and CPPIB are in the process of launch­ing a $500-600 mil­lion stressed as­set fund in In­dia, be­fore the end of the fi­nan­cial year. The fund will work closely with Ko­tak Mahin­dra Group and its af­fil­i­ate, Phoenix As­set Re­con­struc­tion Com­pany (ARC) Pvt. Ltd, to lo­cate op­por­tu­ni­ties in the stressed as­set mar­ket in In­dia. Ko­tak Mahin­dra Bank cur­rently owns 49% stake in Phoenix ARC.

Ko­tak and the CPPIB have been in dis­cus­sions since 2015, as stressed as­sets piled up at do­mes­tic banks in the af­ter­math of an eco­nomic down­turn that made it dif­fi­cult for many bor­row­ers to re­pay debt.

In Jan­uary, Ajay Pi­ra­mal-led Pi­ra­mal Group said it will launch a $1 bil­lion stressed as­sets fund in as­so­ci­a­tion with Nir­mal Gang­wal, founder of Brescon Cor­po­rate Ad­vi­sors Ltd, a cor­po­rate turn­around firm. The fund will be look­ing at in­vest­ing in stressed firms and pos­si­bly take over man­age­ment where needed.

The stressed as­set mar­ket is look­ing at­trac­tive to do­mes­tic and for­eign in­vestors ow­ing to a pile-up of bad loans in the In­dian bank­ing sys­tem, which is work­ing on a March 2017 dead­line to clean up its books.

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