Oaktree Capital chases its maiden structured debt deal in India

Oaktree Capital is in advanced discussions with two large real estate companies for structured debt deals worth up to $100 million

Oaktree Capital, one of the world’s largest special situations and distressed assets funds, may soon close its first private debt transaction in India, according to at least three people aware the of development.

Oaktree is in advanced talks with two large real estate companies to invest as much as $100 million in structured debt deals, according to one of these three people, all of whom spoke on condition of anonymity. 

Oaktree Capital has been looking at opportunities in India for more than a year, said another of the people cited above.

The company was previously in talks with Edelweiss Financial Services Ltd to co-invest in a Hyderabad-based power producer, but the deal could not be closed, this person added.

A spokesperson for Oaktree Capital said that the company has no plans for India at the moment. A spokesperson for Edelweiss declined to comment.

“Oaktree is keen to extend its corporate and distressed debt businesses to India and has been in discussions with at least two domestic fund houses for a possible tie-up,” said the third of the three people cited earlier.

“Both the domestic players, a mid-sized private sector bank and a large NBFC (non-banking financial company), which are focused on asset reconstruction business have since tied up with different foreign partners,” this person said. “For Oaktree Capital, the discussions in India were being led by Frederico Canciani and Pedro Sanchez-Mejorada.”

Frederico Canciani is managing director of Oaktree’s Opportunities Funds in London and New York-based Pedro Sanchez-Mejorada is managing director of Oaktree’s Emerging Markets Opportunities funds and also part of Oaktree’s debt return strategies team.

Oaktree currently manages assets on behalf of institutional investors including global pension funds and sovereign wealth funds.

In June 2013, Oaktree invested Rs120 crore in pharmaceutical packaging firm Cogent Glass Ltd to acquire a 60% stake.

Barring that deal, Oaktree has not publicly announced any other direct investment in the Indian subcontinent.

The firm is the latest among global distressed assets investors exploring opportunities in India.

On 14 November, Mint reported that US-based stressed assets specialist Lone Star Funds had applied to the Reserve Bank of India to set up an asset reconstruction company with an eye on the massive bad-loan-related opportunity.

In October, Caisse de Dépôt et Placement du Québec, the second-largest pension fund in Canada, formed a long-term partnership with Edelweiss Financial Services to invest approximately Rs5,000 crore (nearly $750 million) in stressed assets and specialized corporate credit in India, over the next four years.

Kotak Mahindra Group tied up with Canadian Pension Plan Investment Board in March to launch a $525 million fund to invest in the stressed-asset market in India.

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