Mumbai: Hong Kong-based $8 billion alternative investment fund Ares SSG-backed Acre Asset Reconstruction Co (ARC) purchased a handful of loan portfolios from Housing Development Finance Corp (HDFC) aggregating to ₹1,180 crore in a deal completed last week.
The portfolio includes loans to Gurugram-based real estate developer Vatika Group (₹730 crore) and distressed Nirmal Lifestyle Kalyan (₹430 crore). Acre ARC paid ₹602 crore in an all-cash deal, representing a 49% haircut for HDFC, said a person familiar with the deal.
“Vatika Group has huge land parcels under development both in Gurugram and Jaipur, which has a great potential for recovery. This loan has already been restructured twice so HDFC did not want to keep it on its books. The Nirmal Lifestyle project in Kalyan, on the other hand, is stalled and facing a liquidity crunch which will need fresh funds to revive,” said the person, who did not wish to be identified.
A bankruptcy court in Mumbai has admitted an insolvency petition against Nirmal Lifestyle Kalyan, the arm of Mumbai-based Nirmal Lifestyle, following a plea by Srei Equipment Finance which said the company defaulted on its dues worth about ₹84 crore. However, the company had challenged the order and is looking to settle the dues, ET reported in June.
“These sales by HDFC are also a clean-up ahead of the proposed merger with as Reserve Bank of India (RBI) regulations are stricter on direct real estate exposure,” said the person.
HDFC and Acre ARC did not reply to queries emailed by ET.
Earlier, HDFC had called for counter bids to top Acre ARC’s base bid of ₹602 crore at a 5% markup (₹632 crore). Since no fresh bids were received, the loans were sold to Acre ARC.
Asset reconstruction companies usually buy debt at a haircut with an aim to recover more than what they have paid for the loans.
Acre ARC will recover or restructure these loans either by paying a fee to service providers or by working with the borrowers to find a workable repayment schedule.
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