Ares SSG Funds of Hong Kong on Thursday announced completion of acquisition of debt-ridden Altico Capital, a nonbank lender to property builders. “The acquisition marks the first resolution of a defaulting NBFC outside India’s Insolvency and Bankruptcy Code (IBC) and represents Ares SSG’s single largest investment in India to date,” said Ares SSG.
“Funds managed by Ares SSG, in partnership with Assets Care and Reconstruction Enterprise Ltd. (“ACRE”), a leading asset reconstruction company, have acquired all outstanding loans and investments from Altico for a consideration of approximately Rs 2,800 crore ($380 million), in line with its original resolution plan submitted in February 2020. Ares SSG’s plan has ensured a full resolution while also maximizing the value of the underlying assets for creditors, despite the adverse impact of the pandemic on several of Altico’s portfolio companies,” added the Hong Kong-based hedge fund.
Altico Capital’s key lenders include SBI, Bank of Baroda, Yes Bank, ACRE ARC and AB Finance.
“Ares SSG recognizes the challenges Altico employees have faced during this period of uncertainty which has been further compounded by the pandemic. Ares SSG values their commitment as Altico’s entire team will continue to assist in servicing the existing portfolio,” it said in a statement.
Shyam Maheshwari, Partner of Ares SSG, said: “Our acquisition of Altico reflects Ares SSG’s strong commitment to supporting widespread efforts by policymakers, investors, and industry to alleviate the impact of non-performing assets on India’s banking and financial services sector. This investment also highlights our confidence in the prospects for India and the steps being taken to spur growth that has over the past year been held back by the global pandemic.”
Manish Jain, CEO at SSG Advisors LLP, an advisor to Ares SSG, said: “Ares SSG’s plan for Altico allows its creditors to realise immediate value for the assets. It also offers all stakeholders the prospect of working with a partner that has a record of bringing capital, expertise and bespoke ideas to ensure the resolution of stressed assets and rebuilding of the underlying businesses.”
In December 2020, Bloomberg reported that SSG had previously sought waivers of certain central bank rules, but the Reserve Bank of India was reluctant to do so, fearing it could create precedent for a relaxation of the rules. Relaxations sought included capital adequacy and borrowers’ concentration exposure, which are applicable to shadow lenders in the country, it reported while quoting sources.
Altico has been closely watched as India deals with a broader crisis in the shadow bank industry that began in late 2018 and has been complicated by the pandemic, though there have been some signs of improvement.
Source: Business-Standard