Brookfield in talks to acquire stake in Mumbai NBFC Altico Capital

Photo by Subrata Jana/Mint

Canadian alternative assets manager Brookfield Asset Management is in talks with shareholders of Mumbai-based Altico Capital to acquire a significant stake in the non-banking financial company (NBFC), two people aware of the development said on condition of anonymity.

According to the people cited above, the proposed investment will be a mix of primary and secondary investment, and may lead to the exit of Varde Partners, one of the shareholders in Altico. Brookfield may gain majority control of Altico once the deal goes through.

“The ongoing talks, if successful, would offer Brookfield a ready credit platform in India,” the first person said. “There are significant synergies for both sides.”

“Altico Capital, which is focused on real estate lending, is looking to expand its operations to non-real estate deals, including structured credit transactions,” said the second person.

Established in 2004, Altico, formerly Clearwater Capital Partners India Pvt. Ltd, was one of the earliest entrants in the distressed assets space in the country.

In 2015, the company came to be known as Altico Capital India Ltd, and shifted its focus to high-yield, asset-backed, senior-secured credit opportunities in the real estate sector.

Around the same time, sovereign wealth fund Abu Dhabi Investment Council and global alternative assets investor Varde Partners, along with Clearwater Capital Partners, infused $300 million in Altico.

“Varde Partners is in exit mode and wants to sell its entire stake, as it wants to set up a distressed assets platform in India, which will be focused on high-yield debt and special situations,” the first person said. “This is causing a conflict of interest between Varde and Altico, as the latter, too, wants to venture out of real estate now.”

In May, Mint had reported that Aditya Birla Capital Ltd, the financial services arm of Aditya Birla Group, is in exploratory talks with Varde Partners for an alliance for its proposed distressed assets business.

“Altico also needs to raise fresh equity to grow its book, which currently stands at about ₹4,700 crore, and has been evaluating ways to do that,” said the second person.

When contacted, spokespersons of Varde Partners and Altico declined to comment.

Brookfield has been one of the of most active investors in the Indian realty space and has closed several large deals. In April, it acquired Essar Group’s Equinox Business Park, a commercial property in Mumbai’s Bandra-Kurla Complex for ₹ 2,400 crore.

Mint had reported on 3 April that the company was in the final stages of discussions with private sector lender ICICI Bank Ltd to acquire ICICI Tower in Hyderabad.

In 2016, it had announced a joint venture with State Bank of India to launch a distressed assets fund, wherein it had agreed to commit up to ₹ 7,000 crore. However, no investments have been announced by the joint venture so far.

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This story was first published on livemint.com