SSG buys stake in India distressed assets specialist

R.P. Singh, CEO of ACRE, confirmed the investment to The Economic Times. It was previously reported by other local media. SSG is identified on the ACRE website as a sponsor of the company, alongside IFCI and Punjab National Bank (PNB). IFCI's stake in the business is said to have fallen to 19% from 40%, while PNB's holding has been cut by half to 15%.

ACRE was set up in the early 2000s as an asset reconstruction company (ARC) with a brief to help banks and other financial institutions clean up their balance sheets by taken on their non-performing assets. These groups must be registered with the Reserve Bank of India as securitization and reconstruction companies (SRCs).

ACRE claims to focus on distressed assets that can be resolved within a relatively short timeframe. The company says that the net non-performing assets held by India's financial institutions as a proportion of total assets rose from 1.1% in the 2010 financial year to 1.7% in 2013.

Over this period, the book value of assets acquired by SRCs has jumped from INR622.2 billion to INR885 billion. The acquisitions are transacted by issuing security receipts or paying cash to the banks. As of June 2013, INR189 billion had been issued in security receipts and INR101 billion had been completely redeemed.

The Reserve Bank of India has instructed ARCs to increase the cash portion of their transactions from 5% to 15%, with the balance paid in security receipts. As a result, ARCs are under pressure to raise more capital. SSG is thought to be the first foreign direct investor in the space.

SSG closed its third Asia special situations fund earlier this year at the hard cap of $915 million after approximately five months in the market. The GP's original target was $800 million and a first close came in March at around half the fund size. Total demand was in excess of $1 billion.

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• Topics
• Credit/Special Situations
• Financials
• South Asia
• SSG Capital Partners
• Distress
• Financial Services
• India