Piramal, Bain Capital team up to pursue distressed assets in India

25 Aug 2016

Piramal Enterprises Limited and Bain Capital Credit have signed a memorandum of understanding (MoU) to create a strategic partnership to invest in restructuring distressed assets in India.

The joint venture will look for the huge outpouring of bad debt that the nation's state-run banks offer on their drive to clean up $120 billion of sour debt.

Once finalised, the platform will invest capital directly into businesses and / or acquire debt of such businesses to drive sensible restructurings, a joint release stated.

The two groups see investment requirements of over $1 billion for acquiring banks' bad loans over the next few years.

The joint venture will look at all sectors other than real estate as an asset class. Within these, the platform's preference will be to invest in businesses that require restructuring and have fundamentally strong growth prospects linked to India's infrastructure and consumption needs.

Piramal said it has over three decades of experience in spotting early trends in investment opportunities, acting decisively and successfully creating value for all concerned shareholders. Bain Capital Credit has invested in this asset class for 15 years in North America, Europe, Asia and Australia, it added.

Shantanu Nalavadi, an experienced investing professional with 25 years of experience in India and currently managing partner of Piramal Capital, will lead this strategic partnership.

Ajay Piramal, chairman, Piramal Enterprises Ltd, said, ''We think the recent banking reforms focused on effective and timely resolution of stressed assets, augers well for players like us…. Given our strong relationships and credibility with bankers, entrepreneurs and regulators, we are well-positioned to restructure these assets and play a meaningful role in resolving over-levered capital structures in the country, which in-turn would eventually fuel the growth in the economy.''

Jonathan Lavine, co-managing partner of Bain Capital, said, ''We're pleased to partner with the Piramal Group with the goal of investing substantial capital in India. Bain Capital Credit is one of the world's leading providers of capital for special situations globally, and we've steadily built our capabilities in this space in Asia during the past several years.''

State-owned banks in India are cleaning up their books after an order by their regulator Reserve Bank of India, creating more opportunity for investors in distressed assets.

In July, Canada's Brookfield Asset Management Inc and top Indian lender State Bank of India announced plans to set up a joint venture to invest about $1 billion in Indian distressed assets.

Earlier this month, India's biggest private lender ICICI Bank Ltd and private equity firm Apollo Global Management LLC said they would set up an asset reconstruction company in India to buy into troubled loans held by banks.