Mumbai: Billionaire Ajay Piramal-led Piramal Enterprises Ltd on Tuesday said it is launching a $1 billion distressed asset investment platform in association with private equity fund Bain Capital Credit.

“Once finalized, the platform will invest capital directly into businesses and/or acquire debt of such businesses to drive sensible restructurings. The sponsors believe that there is an over $1 billion investing opportunity in this space over the next few years," Piramal Enterprises said in a statement.

The platform will look at restructuring cases in all sectors other than real estate. Within these, the platform’s preference will be to invest in businesses that require restructuring and have fundamentally strong growth prospects linked to infrastructure and consumption, the statement said.

“Shantanu Nalavadi, an experienced investing professional with 25 years of experience in India and currently managing partner of Piramal Capital, will lead this strategic partnership," the statement said.

While international stressed asset funds have been trying to locate the right kind of stressed assets in India to invest in, domestic funds are expected to perform better due to their familiarity with the country and its processes. 

Bain Capital has been actively investing in stressed assets across the world, including Asia.

“Given our strong relationships and credibility with bankers, entrepreneurs and regulators, we are well-positioned to restructure these assets and play a meaningful role in resolving over-levered capital structures in the country, which in turn would eventually fuel the growth in the economy," Ajay Piramal was quoted as saying in the statement.

Last month, State Bank of India (SBI) said that it is launching a 7,000 crore stressed asset fund with Brookfield Asset Management Inc. As per the structure announced, SBI will put up 5% of the capital and the Canadian partner will bring in the rest.

Earlier this month, ICICI Bank Ltd and Apollo India Credit Opportunity Management LLC announced that they will collaborate to apply for an asset reconstruction company (ARC) licence. Eventually, the collaboration will also look at investing in stressed assets, though ICICI Bank did not reveal the amount it plans to invest.

Other global private equity funds such as KKR and Co., Hong Kong-based SSG Capital Management and International Finance Corp. (IFC), the investment arm of the World Bank, have already acquired stakes in existing ARCs to buy bad loans.

SSG Capital was an early entrant in this space. In September 2014, it acquired 49% of Asset Care and Reconstruction Enterprise. In January 2015, IFC invested in Encore Asset Reconstruction Co. Pvt. Ltd and in March this year, the Foreign Investment Promotion Board gave its nod to KKR for picking up a stake in International Asset Reconstruction Co. Pvt. Ltd.

On 19 January, Mint reported that Piramal was looking to start a $1 billion distressed asset fund with Nirmal Gangwal, who presently runs Brescon Corporate Advisors Ltd, a corporate restructuring and turnaround firm. 

However, the partnership fell through in June and Piramal Enterprises has been in search of a partner to start a new fund ever since. Gangwal, meanwhile, is in the process of raising a $300 million fund that will invest in stressed asset cases, a person close to the development said.

Gangwal was not immediately available for comment.

At the end of June, Indian banks were sitting on 6.3 trillion of bad loans—the legacy of an economic downturn, poor lending decisions, regulatory delays and difficulties in completing land acquisition that stranded many ambitious industrial projects and made it difficult for their promoters to repay debt.

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