Stressed assets market offers opportunities, but obstacles still remain
1 min read . Updated: 15 Mar 2020, 10:59 PM IST
PremiumCertain specific opportunities where investors find it challenging to deploy capital includes priority funding
MUMBAI : The stressed assets market in India offers large opportunities in the wake of a liquidity crunch and defaults by Indian companies, but investors are still finding it difficult to navigate the ecosystem as several issues are yet to be resolved.
“In terms of types of capital available, almost all of it is available and can be brought to bear in a single situation. But the priority is to try and make sure that those deals are closed within a short period of time. Unfortunately, timetables of a particular quarter, provisioning norms, what RBI does to an asset etc., those seem to take precedence over a business that you can really save," Kalpesh Kikani, managing director and senior partner, AION Capital, said at the Mint India Investment Summit & Awards held in Mumbai.
Certain specific opportunities where investors find it challenging to deploy capital include priority funding.
“The nature of risk is that you run on priority funding on underlying assets, especially where the project special purpose vehicle can be taken to the IBC by a homeowner or creditor and then you lose your priority status. So it was meaningless to do priority funding in any real estate project," said S. Sriniwasan, managing director at Kotak Investment Advisors.
Investors believe that the way to boost capital flows is to have fewer regulations.
“By and large, the schemes that RBI has come up with have generally proven to be less effective in doing restructuring. What has been effective is the Insolvency and Bankruptcy Code (IBC). To my mind, the less regulation the better," said Anurag Das, managing director at International Asset Reconstruction Co.
According to Aniruddha Sen, partner at law firm Trilegal, regulations need to provide more flexibility to investors.
“The more prescriptive a solution, the less applicable it will be in an arena where by and large these are custom and highly flexible solutions," he said.
