Canada’s Brookfield, State Bank of India (SBI), and housing finance firm HDFC are joining hands to come up with a mega asset reconstruction company (ARC), people aware of the development told The Economic Times.
To tap the opportunities arising from increasing bad loans and stress among companies, the consortium is expected to invest up to $1 billion (Rs 7,354 crore) as initial equity, they said. Brookfield is believed to hold a majority stake in the venture.
It is learnt that Brookfield will set up a new team for the ARC business.
Typically, ARCs or non-banking financial companies (NBFCs) lever up their balance sheet two to three times on the back of their equity capital.
As part of its strategy to expand global footprint into distressed assets, Brookfied had acquired Oaktree Capital, a US-based distressed asset manager, last year.
In 2016, Kotak Mahindra Group along with the Canada Pension Plan Investment Board (CPPIB) launched a $525 million distressed asset fund.
Even Blackstone had ventured into the ARC space in India in 2018, taking control of the International Asset Reconstruction Company (IARC).
