U.S. private equity firm Apollo Global Management LLC and ICICI Venture, the private equity arm of No.2 Indian lender ICICI Bank, are close to raising $350 million to invest in distressed assets in India, two sources with direct knowledge of the matter told Reuters.
Few funds in India specialise exclusively in distressed assets, but a sharp slowdown in economic growth is expected to create opportunities to invest in struggling companies.
The new fund will invest in companies that face special or distressed situations or restructurings or are spinning off assets, and will also invest in non-performing loans, the sources said.
ICICI Venture and Apollo eventually aim to raise about $750 million for the fund, said the sources, who declined to be identified because the fund-raising has not yet been made public.
Apollo, which manages $86 billion globally, joined with ICICI Venture last year to launch the fund. ICICI manages $2.5 billion across several funds including private equity, real estate and mezzanine finance.
ICICI Venture did not comment, while Apollo did not immediately return an email seeking comment.
The Indian economy grew an annual 6.1 percent in the December quarter, its slowest in nearly three years, and companies in the property, infrastructure and aviation sectors have been hit especially hard by the slowdown.
Private equity companies invested $1.8 billion in India last year, almost unchanged from $1.7 billion in 2010, according to Thomson Reuters data. They have invested about $800 million so far this year, the data showed.
Fund-raising for India-focused funds has slowed dramatically in recent years. In 2008, 49 private equity funds with a focus on India raised $13.9 billion, according to Preqin, an industry data provider. Last year the number of fundraisings dropped to 27 and totaled $5.3 billion.
