Mumbai: Private equity (PE) firm Apollo Global Management has offered to invest up to $150 million in troubled real estate lender Altico Capital India Ltd, said two people aware of the development, requesting anonymity.
As part of the initial talks with Altico’s lenders, Apollo Global expressed its interest to pick up a stake in the company, which could be worth $100-150 million. Part of this investment will be used for interest payments, while the rest will be used to grow the company’s books, said the first person cited above.
According to the person, Apollo wants the lenders to provide Altico with fresh debt financing of $200-250 million to help it grow its loan book.
“Apollo Global has approached the lenders (of Altico) directly with a proposal to take over Altico. These are initial discussions and the contours of the transaction might change going ahead as the investor conducts its due diligence," he said, adding that the Apollo Global met with the lenders on Monday to make its presentation.
The second person said that Apollo is not the only investor keen on the NBFC, and that the lenders are open to meeting other investors, too.
Mint reported on 30 September that Altico Capital, which defaulted on interest payments, is in talks with private equity funds, including Apollo Global Management and Cerberus Capital, for a stake sale to raise funds.
When contacted, Apollo Global declined to comment. “While we do not comment on market speculation, we reiterate that Altico and its shareholders remain deeply committed to the Indian market," said an Altico spokesperson.
At present, Altico’s total outstanding debt from 27 lenders stands at ₹4,361.55 crore. Altico Capital owes the most to IFCI ( ₹463 crore), Yes Bank ( ₹400 crore), State Bank of India ( ₹363 crore), UTI Mutual Fund ( ₹359 crore) and HDFC Bank ( ₹280 crore).
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 had 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 was working alongside turnaround advisory firm Alvarez and Marsal, and legal advisory firm Shardul Amarchand Mangaldas and Co. It also sought a moratorium on further repayments from its lenders.
Altico is one of the many shadow banks affected by the souring market sentiment, following defaults by Infrastructure Leasing and Financial Services Ltd (IL&FS) last year.
“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.