IL&FS, Lone Star Funds to invest $550mn in stressed assets

Moneycontrol BureauAmerican private equity firm Lone Star Funds and India's infrastructure financing company IL&FS will jointly invest $550 million in stressed infrastructure projects in India."The collaboration will have an investment capital pool of USD 550 million, which could result in asset purchases of up to USD2.5 billion," IL&FS(infrastructure leasing and financial services) said in a statement. The collaboration seeks to assist Banks, Sponsors and Asset Reconstruction Companies (ARCs) recycle capital, thus permitting reinvestment capital in fresh projects.The company said, "The progress has been measured, but the recent changes in the regulatory framework bodes well for the resolution of such projects".The banking sector has been saddled with bad loans worth about Rs 7 lakh crore with about 12.34 percent of borrowers defaulting on their loans. A large portion of the stress is contributed by the infrastructure, power and steel sector.While the recognition of stressed loans has doubled from 2013, the Reserve Bank of India and Government are suggesting various mechanisms including a "bad bank", private resolution firms as existing schemes and ARCs have failed to get the desired results.Ravi Parthasarathy, Chairman, IL&FS, said, “The India infrastructure sector is poised for revival as the evolving framework is becoming more conducive for resolving stressed assets."