Ares SSG is scouting for more deals in the real estate space in India where it could acquire only the stressed assets without any regulatory or judicial intervention instead of taking over an entire company.
The Hong Kong-based fund along with Assets Care and Reconstruction Enterprise Ltd (ACRE) purchased the assets of debt-ridden real estate financier Altico Capital India Ltd for ₹2,800 crore last week. Altico will transfer its performing assets to SSG’s private trust and the stressed assets to the ARC.
In an interview, Manish Jain, CEO at SSG Advisors Llp, an advisor to Ares SSG, said the Altico transaction could set a precedent for future deals.
“It’s a first of a kind resolution where a distressed financial services provider without any regulatory or judicial intervention has been resolved. We have not bought the entity, but we have bought the portfolio. That is easier to do. At the entity level, you need the corporate insolvency resolution process. But buying assets is cheaper. The ecosystem has got confidence because of the precedent. It’s a simple straightforward, fastest way to resolution,” Jain said.
Ares SSG, set up in 2009 by former members of Lehman Brothers’ Asia special situations group, has, in the past, backed developers Emaar MGF, Lotus Greens and Lodha Developers, and mortgage lender PNB Housing Finance Ltd in India.
With a pan-Asian presence, Ares SSG is one of the largest alternative asset managers in the Asia-Pacific with about $7 billion in assets under management, more than 80 employees and over 120 direct institutional investors as of 31 December. It also has exposure to real estate through Shapoorji Pallonji Finance Pvt. Ltd, in which it picked up a 46.87% stake in 2018.
Jain said talks are on with lenders to buy more distressed assets in the space.
“Traditional lenders for real estate sector have seen massive retrenchment. All NBFCs which used to do wholesale real estate lending — Altico, DHFL, PNB Housing, there has been a massive pullback. But the need for the capital hasn’t disappeared. Someone has to step in,” Jain said.
The article was first published on livemint.com