[ad_1]
Five people familiar with Apollo’s plans said the company has decided to invest in distressed assets through its AIF and will seek a buyer of over 90% of its stake in ARC.
A person directly aware of the matter said, “Nowadays no fund needs to have an ARC structure for acquisition of distressed assets. “Doing this through AIF gives greater flexibility in meeting regulatory compliances. ARC sold its only asset last week and will now engage in the distressed asset space through AIF.”
Another person said that Apollo holds over 90% stake in ARC and has already approached some big funds to buy their stake.
“They would love to find some value for their stake and cut their losses,” said another person aware of the developments. “ICICI, which holds less than 10% stake, will decide its future course of action based on whether Apollo finds a buyer. This company never really took off and there were no notable deals, so if They don’t find any buyers, it may just fold.”
More than $1 billion has been invested in the New York-headquartered fund, which manages $513 billion globally India and will continue to invest in its private equity business, real estate and credit business as usual, they said.
Apollo declined to comment. ICICI Did not respond to an email seeking comment.
There is little information available on the company’s website about Apollo backed ARC, Archean Revitalization Pvt Ltd with no update on the company’s assets under management.
“They’ve done a handful of deals,” said a third person aware of the development. “One of the rare ones is the Srinagar Banihal Expressway Ltd, in which it had taken a total debt of 26%. Otherwise it had nothing to pay attention to. It is not surprising that they are exiting as they are priced at market rates. Couldn’t match up to expectations. And in the process lost out on several deals.”
Apollo’s Archean had taken a loan of Rs 200 crore along with others
And in Srinagar Banihal Highway, last year offered haircuts up to 60%. The debt was sold to SC Lowy-backed Prithvi ARC as of last week in a recently completed deal, the first person cited above said.
ICICI announced its partnership with Apollo in August 2016 to acquire bad debt and equity stake in distressed companies from lenders. It was granted a certificate of registration by reserve Bank of India in August 2018.
It is not clear how much capital Apollo and ICICI have invested in the venture. reserve Bank of India (RBI) rules state that the minimum capital for ARC is Rs 100 crore. But this total amount need not be invested. Companies just need to show that they have liquidity of Rs 100 crore to start ARC business.
“The business of ARC has changed. It is very competitive. After IBC, there is a system that has evolved for bidding and resolution of distressed assets. Then the big global funds are also looking to cut this pie, so It’s not easy for everyone to succeed,” said a third person familiar with Apollo’s plan.
Ratings estimates that the total AUM for ARCs declined to ₹1.07 lakh crore in the financial year ended March 2019, from a peak of ₹1.13 lakh crore in the financial year ended March 2019.
The formation of National Asset Reconstruction Company Limited (NARCL) earlier this year would mean that huge assets worth over ₹500 crore would be transferred to a government-backed bad bank, leaving ARCs to scramble for pieces or from aggregators. Will have to pay more. worth. All these factors may make large funds rethink their distressed asset strategy for India.
Archean is the second venture with ICICI that Apollo is exiting. A few years ago, Apollo decided not to invest much money in AION, a special position investment vehicle between Apollo and ICICI Venture, the private equity arm of ICICI Bank.
[ad_2]
Source link
