Moneycontrol
Last Updated : May 15, 2016 04:50 PM IST | Source: PTI

Arcil targets comeback through mid-cap deals, fundraising

Country's oldest asset reconstruction company Arcil has blamed an "overheated market" for its slow pace of snapping up bad assets in recent years, but asserted that it will regain its past eminence by focusing on mid-cap deals and undertake a fundraising exercise this fiscal.


Country's oldest asset reconstruction company Arcil has blamed an "overheated market" for its slow pace of snapping up bad assets in recent years, but asserted that it will regain its past eminence by focusing on mid-cap deals and undertake a fundraising exercise this fiscal.


"I think some of our competitors have been much more aggressive. We have bought some small pools in FY16. We will continue to work on more acquisitions," Asset Reconstruction Company of India (Arcil) Managing Director and Chief Executive Vinayak Bahuguna told PTI.


The company, promoted by a clutch of banks, bought only about Rs 500 crore NPAs in 2015-16 as against Rs 2,500 crore in the previous fiscal, while new entrants have grown manifold in recent years.


For instance, Edelweiss ARC, which is the largest player in the country, had snapped up bad loans worth Rs 6,000 crore in fourth quarter of 2015-16 alone, taking its AUM to around Rs 25,000 crore in the year.


"The market was a little overheated in terms of prices, we didn't think we could make sufficient money on those assets to service our shareholders adequately," he said.


Other ARCs like the ones promoted by JM Financial and Kotak Mahindra Group have had a busier 2015-16, where they picked up large accounts.


Arcil will focus on transactions in the mid-cap space and will enter large value transactions only through partnerships with financial institutions, he said.


Bahuguna said Arcil will undertake a fund raising exercise sometime this fiscal and is open to money coming in from foreign investors after the government allowed 100 per cent foreign ownership in the sector.


According to experts, foreign investors are likely to be the only source of funds for Arcil as domestic institutions do not fund such riskier assets and its existing shareholders battle out their own issues with bad assets draining growth capital.

Bahuguna asserted that through these strategies, Arcil will be able to re-emerge as the leading player.

First Published on May 15, 2016 01:16 pm
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