The distressed asset investment landscape in India has come of age and the time is ripe for discerning investors to step in and pick “value” assets. Over the last two years, there has been a remarkable change in the resolution process for non-performing loans (NPLs) on banks’ balance sheets. While India has had a fair share of stressed assets at regular intervals, investors have stayed away from the space in the absence of robust legal, regulatory and resolution frameworks. Distressed asset investments are exciting because of their inherent “buy low-sell high” potential and low correlation to other asset classes. To some investors, especially large corporate strategic ones, the current situation seems like a once-in-a-lifetime opportunity to expand capacity cost-effectively. A number of the resolution plans submitted to the NCLT involve big companies looking to strategically acquire large stressed capacities at discounted rates. The Reserve Bank of India (RBI) has come up with two lists that target a total of Rs.4.06 trillion of the total Rs.8.77 trillion of outstanding NPLs.
Sintex-BAPL Ltd, a subsidiary of Sintex Plastics Technology Pvt. Ltd, said private equity fund KKR India and its affiliates have agreed to invest Rs.1,250 cr. in the company. Sintex-BAPL is part of the Ahmedabad-based textiles and plastics manufacturer Sintex Group which was de-merged in May last year.
The Board of private sector bank Federal Bank has approved 26 per cent strategic investment by homegrown private equity player True North in its wholly-owned subsidiary FedFina subject to statutory and regulatory approvals. The investment will help FedBank Financial Services Limited augment its capital base primarily to support its growing asset business and to grow its branch network. It will help further improve the company’s financial fundamentals by strengthening its capital adequacy and diversifying its funding sources.
Earthfood, a Pune-based startup that farms and retails residue-free fruits and vegetables, has raised Rs.6.4 cr. in seed funding from Rairah Corporation for a 30% stake for post-money valuation of nearly Rs.28 cr. With this fund infusion, the company aims to enter the milk products segment such as ghee, buttermilk, and dehydrated spices.
A clutch of investors is in the running to invest in NTex Transportation Services, which owns and operates logistics and distribution platform ElasticRun, the Pune-based startup, which has emerged as one of the hottest prospects in India’s product technology space.
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