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Asset Reconstruction Company (India), or ARCIL, plans to raise about $500 million as capital from investors to acquire non-performing loans from financial sector players in the country.
ARCIL’s Chief Executive Officer and Managing Director Vinayak Bahuguna said the company would firm up fund-raising and business plans over the next 60 days. Capital-raising is top priority and how much capital the company will raise depends on the business climate. Its net-worth was a little over Rs 1,500 crore with assets under management of Rs 11,000 crore.
While ARCIL can tap existing shareholders (mostly public sector and private banks), it can also approach investors directly for infusing capital. However, no specific plans have been firmed up, he said.
Given the limited amount of capital available for asset restructuring companies (ARCs) in the domestic market, there is a need to allow 100 per cent foreign ownership of ARCs against 74 per cent ceiling applicable at present, he added.
Elaborating on ARCIL’s business strategy, Bahuguna said it would prefer to have assets based in a specific industry than work across the board. ARCIL will be very selective in acquiring big-ticket assets as it involves a large amount of capital. He indicated that the company would look for return of about 25 per cent for making investments in assets.
According to Bahuguna, ARCIL’s retail assets division, which has Rs 800 crore worth of assets under management, is performing well and there are no plans to hive off this division into a separate corporate entity.
ARCIL would look at Alternative Investment Funds (AIFs) to raise resources for acquiring non-performing assets. This might need change in AIF rules prescribed by the Securities and Exchange Board of India, he added.
