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SBI, Brookfield launch ₹7,350-crore fund for stressed assets
MUMBAI: As a part of its bad loans resolution process, the country’s largest lender, State Bank of India on Wednesday roped in American fund house Brookfield Asset
MUMBAI: As a part of its bad loans resolution process, the country’s largest lender, State Bank of India on Wednesday roped in American fund house Brookfield Asset Management to setup an over ₹7,350-crore stressed assets fund.
This is the second such fund in the country. Earlier in March, Kotak Bank roped in Canadian Pension Plan Investment Board (CPPIB) to launch a $525-million fund to invest in stressed assets.
Out of the total investible fund of ₹7,350 crore, the New York-based Brookfield, which manages around $240 billion in assets, will contribute ₹7,000 crore and the remaining 5%, or ₹350 crore, will come from SBI, a senior SBI official said. The fund will include contributions from other lenders at a later stage.
The proposed joint venture will independently evaluate and invest in stressed assets, and will rely on the New York-based Brookfield’s operational expertise to manage recapitalised businesses, SBI said. It did not clarify whether the fund will invest in a stressed company’s equity or buy out bad loans from banks.
However, the official quoted earlier said that the fund will primarily snap up SBI’s stressed assets, “but we will also be open to others. SBI being the lead lender in most of the large accounts, most of the assets will be ours.”
“This approach of collaborating with global players will enable banks in general, and SBI in particular, to find alternate solution for resolution of stressed assets,” SBI chairman Arundhati Bhattacharya said. It will also be more acceptable to both lenders and borrowers, especially in cases where promoters are not able to infuse funds, and lenders are reluctant to take additional exposure, she added.
“This is a great opportunity to continue to invest in the long-term India story,” Brookfield India head Anuj Ranjan said.
The government and the RBI have a number of debt-resolution mechanisms in place, but deals have been slow to close since sellers and buyers have found it difficult to agree on a val-uation. As of March 2016, gross non-performing assets (NPAs) of 40 listed banks stood at ₹5.82 lakh crore, up 93% from ₹3.02 lakh crore in the year-ago period. SBI’s gross NPAs rose to 6.5% of advances, from 2.5% a year-ago.
There are 8,167 wilful defaulters in the country, who owe banks₹76,685 crore, finance minister Arun Jaitley has said.
