SSG Capital plans investment vehicle to acquire distressed assets in India
Move comes as SSG Capital has been preparing to create a large war chest for investing in the bad loan opportunity in India and other Asian countries
SSG Capital Management, an Asia-focused special situations investment firm founded by former Lehman Brothers Inc. executives, is planning an investment vehicle in India to buy distressed assets in the country, two people aware of the development said.
“SSG Capital has upped its focus on India, given the developments around the bad loan issue. And as part of the increased focus, they are exploring the possibility of setting up an onshore investment vehicle under the alternative investment fund (AIF) regime, to invest in opportunities in the Indian distressed assets space. There is a strong interest in this space and they can raise capital here too for investing in distressed assets or use it for structuring of their deals,” said one of the two people aware of the development, requesting anonymity as he is not authorized to speak to reporters.
According to the second person, SSG recently hired a legal counsel in its Mumbai office, who is also tasked with helping the firm explore the option of setting up a domestic investment vehicle. “SSG has recently hired Praveen Thomas as senior legal counsel, who is working on the plan. He was previously associated with Deutsche Bank,” he said.
Emails sent on Monday to SSG Capital were not answered.
The move comes as SSG Capital has been preparing to create a large war chest for investing in the bad loan opportunity in India and other countries in Asia.
On 24 July, Mint reported that SSG Capital is raising close to $2 billion across two Asia-focused new funds.
The firm is raising close to a billion dollars each across two strategies - special situations and private credit, Mint reported.
Founded in 2009 by Edwin Wong, Andreas Vourloumis and Shyam Maheshwari, SSG Capital Management has a focus on China, India and South-East Asia.
A special situations fund invests in events that have impacted a company’s performance and valuation. These could involve investing in opportunities like restructuring of balance sheets, corporate spin-offs and asset sales, among others.
The firm had last raised a $915 million fund, its third, in 2014, according to media reports. It raised its first fund in 2010 and the second in 2012.
SSG is currently one of the most active investors in the Indian distressed assets space.
Earlier this week, Mint reported that the investor is keen on picking up a stake in debt-laden Bhushan Steel Ltd, which is currently going through the insolvency and bankruptcy process in National Company Law Tribunal (NCLT).
Last year, SSG Capital was reported to be in talks with Ruias-promoted Essar Steel Ltd. SSG had offered to buy a little less than half of the company’s rupee debt through Asset Care and Reconstruction Enterprise Ltd, where it owns 49%, Mint reported.
However, the deal was not struck. Essar Steel, with debt of over Rs37,000 crore is one of the 12 major defaulters identified by the Reserve Bank of India (RBI). RBI has asked banks to initiate insolvency proceedings against them under the insolvency and bankruptcy code.
SSG was the first foreign investor to pick up stake in an asset reconstruction company (ARC) in 2014, after foreign direct investment rules for capital raising by ARCs were relaxed. It acquired a 49% stake in Asset Care & Reconstruction Enterprise for around Rs41 crore, according to media reports.
In 2015, real estate developer Emaar MGF raised Rs600 crore from SSG Capital for its projects in the Delhi-NCR region, according to an Economic Times report. SSG Capital in 2015 also bought Amtek Auto’s debentures held by JPMorgan Asset Management Co., the newspaper reported. The sale came after Amtek Auto’s credit ratings were downgraded, leading to the net asset values of the JPMorgan schemes holding these instruments falling sharply.
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