Real estate-focused lender Altico Capital India Ltd, which defaulted on interest payments, is in talks with private equity funds, including Apollo Global Management and Cerberus Capital, for a stake sale, according to two people aware of the development.
The non-bank lender has approached several funds to invest in the company, said one of the two people cited above. “While a portion of the investment will be used to pay back lenders, the rest of the fund is likely to be deployed for project completion," the person said on condition of anonymity.
Altico’s troubles started when it missed an interest payment to Dubai-based Mashreq Bank on 12 September. On 20 September, Mint reported that Altico has told its lenders that as part of a resolution plan, it is in talks to sell some assets and infuse fresh funds from new shareholders. For this, Altico said it is working alongside turnaround advisory firm Alvarez and Marsal and legal advisory firm Shardul Amarchand Mangaldas & Co. It also sought a moratorium on further repayments from its lenders.
Apollo Global and Cerberus are among the few private equity firms which Altico is in a serious conversation with, the second person said, adding the investors have proposed a 30-40% haircut on the debt owed to the lenders, as part of the deal to infuse fresh capital into the lender.
Mint could not ascertain the quantum of the stake or capital that Altico is looking to raise from these investors. At present, Altico’s total outstanding debt stands at ₹4,361.55 crore, from 27 lenders including Yes Bank, State Bank of India and HDFC Bank, among others.
Email queries sent to a spokesperson of Cerberus Capital remained unanswered till the time of going to press. Nipun Sahni, head of Apollo Global’s real estate arm in India, did not respond to calls and text messages seeking comment on the development. Altico Capital’s chief operating officer (COO) Sanjeev Agrawal too did not respond to calls and email queries.
Altico is one of the many shadow banks affected by the souring of market sentiment, following defaults by Infrastructure Leasing and Financial Services Ltd (IL&FS).
“A significant strain in short-term financing markets precipitated by the September 2018 default by IL&FS created a knock-on impact on other NBFCs and the real estate sector in general," Altico Capital said in a statement earlier this month.
Mint reported on 23 September that Altico’s three shareholders—private equity firms Varde Partners, Clearwater Capital Partners and Abu Dhabi Investment Council—had initiated negotiations with its lenders for a debt restructuring while also planning to either offload their stakes or sell a large portion of the portfolio.
On 22 September, the lender asked its chief operating officer Agrawal to take charge of the company following the sudden resignation of its CEO Sanjay Grewal.