Kotak Mahindra Group ties up with Canada Pension Plan for investment in Indian stressed assets.

Industry:    2016-03-15

The Kotak MahindraBSE 0.07 % Group has tied up with Canada Pension Plan Investment Board (CPPIB) to invest in stressed assets in India to take advantage of opportunities that arise as banks clean up account books of bad assets. The agreement entails a total investment of up to $525 million, of which as much as $450 million will come from CPPIB. “The current environment has created a much larger opportunity that requires significant capital commitment,” said S Srinivasan, CEO, Kotak Special Situations Credit Fund. “Banks will start selling at a fair price” and because of provisioning by banks through the next 12-18 months, “the bid-ask will narrow between the sellers’ expectation and buyers’ inclination. CPPIB will put patient capital to work, backed by strong and active asset management, to capitalise on the stressed assets market.” This investment is aimed at tapping the growing opportunity arising from the current stress in the Indian banking and corporate sectors. Kotak Mahindra and its affiliate Phoenix Asset Reconstruction Co. have been dealing in the distressed and structured credit market for over a decade. “This investment is an important step in CPPIB’s stratestrategy to build a diversified credit business and will add to our direct credit investment capabilities in India,” said Adam Vigna, managing director, principal credit investments, CPPIB. Kotak will act as an advisor as CPPIB invests in assets that suit its long-term investment mandate

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