Global private equity fund Carlyle and special situations investor Aion Capital along with French energy management company Schneider Electric are among the potential suitors for Su-Kam Power Systems which is facing corporate insolvency proceedings, two people directly aware of the development said.
According to the persons, the suitors have submitted an expression of interest (EoI) and are expected to put a binding offer by the August 10 deadline. “There are three more potential bidders apart from these three,” one of the persons said. While the identities of the other three bidders were not immediately known, the persons said that two are distressed assets funds while the third is an individual bidder.
Su-Kam Power Systems Ltd (SKPSL) claims to be one of India’s largest retail power solutions company and manufactures a wide range of devices which includes as inverters, batteries and solar panels and was founded in 1998 by Kunwer Sachdev. The company has total unpaid debt of close to Rs 370 crore of which IDBI Bank and SBI own the largest share. Su-Kam was referred to the National Company Law Tribunal (NCLT) for bankruptcy proceedings by the State Bank of India (SBI) in November last year and was admitted in April by the court, following which Rajiv Chakraborty, Partner PwC India, was appointed resolution professional for the company.
For Carlyle, which has only invested in pure play growth and buyout deals in India so far, the potential transaction would mark its foray into the bankruptcy space where several large assets have changed hands in the recent months. Mint was the first to report on June 25 that Carlyle Group, which has recently announced the final close of its fifth Asia buyout fund at $6.55 billion, was actively looking at investment opportunities in India’s distressed assets space and was evaluating consumer focussed businesses which that are expected to come up for change of control under the Insolvency and Bankruptcy code (IBC). Mint had reported on April 30 that strategic bidders such as Greaves Cotton, Luminous Group and Microtek had shown early interest in acquiring the company and were in negotiations with the lenders to potentially acquire it but have not yet put a formal expression of interest.
Spokespersons of Carlyle, Aion and Schneider declined requests for comment while emails sent to PwC remained unanswered until publishing of this story. The submission of expression of interest by Carlyle and Aion underlines the growing interest of large private equity funds in cracking deals in the insolvency space where several well known consumer brands are likely to be up for change of control. Industry watchers say that the next round of insolvency cases are likely to see greater participation from distressed assets funds. “Going ahead we expect active participation from private equity funds in resolving corporate insolvency cases,” said KVS Manian, president for corporate, institutional & investment banking at Kotak Mahindra Bank. “The deal sizes in some of the early cases were way too large for the funds to participate but there will be far more activity in the mid-size space,” Manian added.
This article was first published on Livemint.com