ICICI Bank, Apollo to set up Indian asset reconstruction company

This initiative will revitalize distressed assets and maximize their economic value, although no monetary values were disclosed

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

AION Capital Management, a joint venture between units of the two financial firms, will be a third partner in the new entity, which has yet to obtain regulatory approvals, the companies said in a joint statement.

No monetary values were disclosed, and the new asset reconstruction company will also look at buying equity stakes in companies.

Global distressed asset buyers such as J.C. Flowers & Co and Apollo Global are flocking to India, where banks have been ordered to clean up an estimated $120 billion of bad and troubled loans.

"This initiative will seek to revitalize distressed assets and maximize their economic value," said the statement.

The joint venture comes after Canada's Brookfield Asset Management Inc said in July it planned to invest about $1 billion in Indian distressed assets through a joint venture with State Bank of India .

Shares of ICICI Bank, India's top private sector lender by assets, slumped 5.1% on Monday after reporting its latest quarterly profit fell about 25% as its provisions for bad loans more than doubled.