Soros, Blue Ridge buy 21% in Rel Cap ARC
George Soros-promoted fund and the US-based investment bank Blue Ridge will together pick up 21% in Reliance Capital’s asset reconstruction business.
While George Soros will hold 11% stake in the company and Blue Ridge 10%, the three Indian partners — GIC, Indian Bank and Corporation Bank — will hold 10% each. Reliance Capital will have the remaining 49% equity. The initial investment in the business will be Rs 100 crore. The board of Reliance Asset Reconstruction Company has approved the investment and shareholding pattern of the company. The spokesperson for Reliance Capital confirmed the development.
This is the second foreign investment in the asset reconstruction business in India after the government allowed FDI up to 49% in the sector last November. Barclays was the first foreign company to sign an agreement with ICICI to pick up 10% in Asset Reconstruction Company of India (Arcil).
ARCs buy out non-performing assets of banks and then turn them around. Currently, Rs 65,000 crore worth of NPAs are lying with various banks.
Picking up distressed assets, as a concept, is gaining strength in India with several foreign players also showing ample interest in this sector. Sources said JP Morgan, Goldman Sachs and Bank of America were also in talks with Reliance Capital to pick up a stake in its ARC business. As of now, Arcil dominates the asset reconstruction scene in the country.
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