Non-banking finance company Sammaan Capital sold a Rs 5,000 crore loan portfolio to stressed loan aggregator Arcil, in one of the largest such loan sales in the just-ended fiscal year.
The loan pool spans real estate loans, large ticket mortgage loans, and loans against property, said people familiar with the matter. Arcil valued the loan portfolio at about Rs 2,400 crore or around a 52% haircut.
The transaction forms part of Sammaan Capital’s plan to trim legacy loans ahead of embarking on a new growth trajectory, the people said.
“These loans are stressed loans but not yet NPA and part of the company’s legacy book where collections were expected only next fiscal year (FY27),” said a person aware of the deal. “This sale is in line with the company’s preannounced plan after the investment by International Holding Co (IHC) to focus only on the growth book—namely gold loans, personal loans, and loans to small businesses in the low to middle income segment.”
The deal is structured in a 15:85 structure in which Arcil will pay about Rs 360 crore in cash. Arcil has issued security receipts (SRs) for the remaining amount which will be redeemed as and when the loan collection progresses.
“Since these are loans which are only delayed in payments, the chances of recovery are higher,” a second person said. “It allows Sammaan to now fully focus on its growth book while simultaneously running down its legacy book.”
Arcil and Sammaan didn’t respond to email queries.
The deal was inked before Avenir Investment RSC, an arm of Abu Dhabi-based IHC secured approvals to buy a majority stake in Sammaan.
On March 31, Sammaan received Rs 5,652 crore to purchase 41.5% stake in the company as part of the initial tranche of the stake acquisition. An additional Rs 3,198 crore will later be paid by IHC within a period of 18 months upon conversion of the warrants into fully paid equity shares to take Avenir’s stake to 66.65%. This is one of the largest investments by a Middle East company into India.
In an interview with ET after completion of the Avenir deal last month, Sammaan CEO Gagan Banga said the large capital infusion into the company gives it a strong platform to grow its book and “play on the front foot.”
“Sammaan now becomes more of an execution machine rather than one which was navigating the environment…Our assets under management (AUM) is about Rs 65,000 crores and in three years, it will be close to Rs 1.3 lakh crores,” Banga said at the time. “Our capital adequacy is comfortably above 30%…We now have the capacity to grow without any further dilution at least for the next five years,”
The company is aiming annualised credit costs of below 1%, which the deal with Arcil also helps to achieve together with releasing management bandwidth towards using the newly acquired capital to grow loans.
Earlier this month, Sammaan Capital was upgraded to AA+/stable by rating agency Crisil noting the strong support from the IHC Group, along with sustained strong capitalisation and robust buffers. This was the first rating upgrade for Sammaan in nearly a decade, the company said in a stock exchange filing.
“IHC is expected to provide support to the company in the form of strategic and managerial oversight,” Crisil said, noting the benefits Sammaan secured from the IHC investment. “IHC will also consolidate Sammaan Capital in its financial statements and is committed to provide financial support to Sammaan Capital, as and when required. Further, IHC is also expected to bring in branding linkages by adding a tagline indicating that Sammaan Capital is ‘an IHC Group company.
Source: Economic Times