Indian billionaire Ajay Piramal to float $1b fund for stressed assets

A file photo of Ajay Piramal. Piramal Capital currently manages assets in excess of Rs.22,000 crore, with specifically tailored investment strategies for real estate, infrastructure and other special situations. Photo: S. Kumar/Mint

The Ajay Piramal-led Piramal Group will be floating a $1 billion stressed asset fund in association with Nirmal Gangwal, founder of turnaround company Brescon Corporate Advisors Pvt. Ltd.

The fund will look to invest in stressed assets at a time when the country’s lenders are trying to clean up their balance sheets. This process is likely to throw up opportunities for those willing to put in the capital and management bandwidth required to turn these assets around.

“Given our strong operating and financing credentials, we believe we can effectively tailor a strategy centred around the turnaround potential in good quality assets and sound businesses that require financial and operational restructuring,” a Piramal Group spokesperson said in an email response.

Piramal Capital, the group’s fund and asset management arm, currently manages assets in excess of Rs.22,000 crore, with specifically tailored investment strategies for real estate, infrastructure and other special situations.

On Tuesday, The Economic Times had reported that the Piramal Group would be floating a Rs.6,000 crore stressed asset fund.

Gangwal, who has been appointed managing partner of the fund, said it will look to take over stressed firms, by buying equity stakes, and work on turnaround strategies. He has stepped down from a management role at Brescon Advisors.

“We will only be looking at cases where there is a possibility of a turnaround. We are currently in discussions with banks to consider buying into some stressed asset cases. However, we have to ensure that the price is realistic and something that suits our appetite,” he added.

The fund will be willing to invest capital in the assets it acquires to ensure a turnaround, Gangwal said.

The fund has already initiated talks with banks over cases where lenders have invoked strategic debt restructuring (SDR) rules and taken over operational control by converting part of their debt to majority equity.

Under SDR norms, banks are allowed to hold this majority equity in their investment book for a period of 18 months, by the end of which they are required to find a buyer for the stake.

Since the Reserve Bank of India (RBI) released its SDR norms in June 2015, banks have invoked SDR in 15 accounts where the total loans stand at about Rs.83,100 crore, Religare Institutional Research estimated in a 4 January report.

Religare analysts expect another Rs.63,900 crore worth of loans to enter the SDR process in the next 12-24 months.

“We may even look at stressed assets where banks are yet to invoke SDR,” Gangwal added.

Talking about the management of these stressed firms, Gangwal said that the fund may look at continuing with the present management in these companies if they are in sync with the turnaround plan. Appointing third-party managers is also a possibility, he said.

RBI has repeatedly asked banks to work with domestic and international stressed asset funds to ensure a quicker solution to the bad loan problem facing the country’s lenders.

According to the December edition of RBI’s Financial Stability Report, the gross non-performing asset (NPA) ratio of the banking system was about 5.1%, as of 30 September.

The ratio of stressed advances (including restructured loans and gross bad loans) to total advances rose to 11.3% as of September from 11.1% in March. The ratio of stressed assets in public sector banks was 14.1% in September, RBI said in its report.

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This article was first published on Livemint.com

 

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Following vacancies can be applied for (only in Singapore).   

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  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.