CPPIB, Kotak form $525m India distressed asset vehicle

The vehicle will have a flexible investment mandate, both providing financing solutions to companies on request and participating in stressed asset sales by banks. It aims to restructure and turn around companies that are in distress, while taking their underperforming loans off the financial institutions' books.

CPPIB will have the option to invest up to $450 million in the vehicle. The firm sees the partnership as an opportunity to build out its global credit business and its direct credit investment capabilities in India.

CPPIB is one of several firms to seek opportunities in India's distressed asset landscape. In the past few weeks, Everstone has announced a new division to invest in distressed businesses, headed by former Advent International executive Avnish Mehra, and US-based J.C. Flowers formed a joint venture with Ambit Holdings for an asset reconstruction company and a distressed debt fund.

Interest in distressed assets is growing as Indian banks try to reduce their burden of non-performing loans. The Reserve Bank of India estimates that banks collectively hold over INR7 trillion ($110 billion) in distressed debts.

"The current environment has created a much larger opportunity that requires significant capital commitment," S. Sriniwasan, CEO of teh Kotak Special Situations Credit Fund, said in a statement. "We are delighted to have a world-class institution such as CPPIB put patient capital to work, backed by strong and active asset management, to capitalize on the stressed assets market."

In addition to the new collaboration, CPPIB is an existing investor in Kotak Mahindra Bank. The firm made three investments in the bank since 2013, most recently paying INR11.5 billion to raise its stake to 4.9%. It has a further active presence in India through direct investments, co-investments, and LP commitments, and opened its first India office last year.

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• Topics
• South Asia
• Financials
• Credit/Special Situations
• Fundraising
• LPs
• India
• Canada Pension Plan Investment Board (CPPIB)
• Special Situations