KKR in talks to buy controlling stake in asset reconstruction firm IARC

A consortium led by private equity major Kohlberg Kravis Roberts & Co (KKR) is holding discussions to acquire a controlling stake in International Asset Reconstruction Company Private Limited (IARC), which buys stressed assets from banks and makes money by recovering them, as per a news report by The Economic Times.

IARC's chairman Arun Duggal, who along with former State Bank of India chairman and telecom regulator MS Verma founded IARC in 2002, told the paper that the company is talks with investment firm KKR, the global leverage buyout firm which has been an active private equity and structured debt investor in India.

IARC is involved in acquisition, resolution and reconstruction of non-performing loans.

An email query to Arun Duggal seeking further details on the aforesaid development did not elicit a response at the time of filing this article.

The consortium is holding discussions to inject around Rs 300 crore through a structured deal which would give it a 26 per cent stake in the company, and then subsequently raise the holding to 51 per cent over the next three years with KKR alone retaining over 26 per cent stake, the paper said citing unidentified sources.

Apart from acquiring stake in IARC, KKR is likely to participate in future fundraising by IARC, the paper said.

IARC, with assets around Rs 1,500 crore under management, has three sponsors—HDFC Bank, Tata Capital Finance Services and ICICI Bank. Other stakeholders of the company include City Union Bank. FMO Netherlands and Standard Bank of South Africa are among the overseas investors in the company.

Earlier this year, the Reserve Bank of India had released “framework for revitalising distressed assets”, directing asset reconstruction companies to join hands with foreign funds to bolster India's bad loan market.

In the space, Asset Care and Reconstruction Enterprise recently sold 49 per cent stake to Singapore-based distress and special-situation private equity fund SSG Capital Management Pte Ltd for an undisclosed amount.

(Edited by Joby Puthuparampil Johnson)