SREI Alternative to float under $300M fund for distressed assets

Financial services firm SREI Alternative Investment Managers Ltd, part of Kolkata-based SREI Group, is looking to float a Rs 2,000 crore (about $291 million) fund to invest in debt instruments of stressed companies.

The India Vision Fund will focus “on companies that can be revived through proper nursing”, the company said in a statement.

The fund will initially buy assets or loans and invest by way of debt and other instruments that will be taken over from firms, banks, non-banking finance companies or even asset reconstruction companies. 

“There is a large supply of stressed assets which banks are trying to sell,” said Nikhil Shah, managing director at Alvarez and Marsal Holdings LLC in India. “If there are more people interested in acquiring those assets with the intention of turning them around for a reasonable return on their investment, it is a win-win situation for everyone.”

Nalin Kumar, chief investment officer at SREI Alternative the company is in talks with some companies and their lenders. Many investors, both domestic and international, have also expressed interest to invest in the fund with some of them at an advanced stage of investment, he said.

“We feel that good assets have been created in the country and it is a shame if these assets are allowed to languish due to absence of proper assistance,” he said. “The opportunities in this area are huge.”

SREI Alternative is the latest company to float a fund for stressed assets. Earlier this year, The Economic Times reported that Ajay Piramal-led Piramal Enterprises Ltd was gearing up to launch a fund with a corpus of Rs 6,000 crore (about $887 million) to invest in companies that can be turned around.

Global fund Apollo Global Management is also active in the stressed asset segment through a joint venture with ICICI Venture called AION Capital Partners.

Banks are speeding up the process to offload bad loans after the Reserve Bank of India (RBI) nudged them to clean up their books. The stressed loan book of commercial banks in India is estimated at Rs 7 lakh crore.

In June last year, the RBI allowed lenders to seize control of a company if a debt restructuring fails and sell their stake in the defaulting firm to recover dues under its strategic debt restructuring (SDR) guidelines. The step was aimed at reining in willful defaulters and curbing bad loans.

Banks have already initiated SDR measures in several companies including Gammon India, Monnet Ispat, IVRCL, Electrosteel Steels Ltd, Lanco Teesta Hydro Power Pvt Ltd, VISA Steel Ltd and Jyoti Structures Ltd.