Avenue Capital Seeks To Become Largest Shareholder In India’s Oldest ARC - EcoFinBiz Blog

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Avenue Capital Seeks To Become Largest Shareholder In India’s Oldest ARC

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India’s oldest asset reconstruction company is set to see a change in its ownership pattern, which may allow the firm to become more aggressive in the bad loan market in the country.

U.S. based Avenue Capital is set to pick up 27 percent stake in a Asset Reconstruction Company of India Ltd (ARCIL) from a clutch of existing investors, the management said in an announcement on Monday. As part of the deal, five existing shareholders will sell their holdings. This includes IDFC, Barclays, Karur Vysya Bank, First Rand Bank and Ashmore Capital. The deal will be valued at about Rs 1000-1500 crore, said Vinayak Bahuguna, MD & CEO at ARCIL in a press conference.

Avenue Capital will become the largest shareholder in ARCIL after the transaction. RBI approval for the deal is awaited.

While ARCIL is India’s oldest asset reconstruction firm, private peers like Edelweiss ARC have been more active in the stressed asset market in India in recent years. Indian banks are sitting on more than Rs 10 lakh crore in bad loans, making this an opportune time for ARCs to pick and choose the right assets. ARCIL, however, has remained focus largely on the retail and small and medium enterprises segment.

According to Bahuguna, ARCIL is selectively looking at some of the industrial assets too. We are looking at steel, textile and road project, he said while adding that the firm may also evaluate some stressed power projects.

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