Piramal, Bain Capital fund in talks to buy stressed assets under insolvency: Ajay Piramal

Ajay Piramal, Chairman, Piramal Enterprises

As the banking industry grapples with high non-performing loans, a stressed assets fund joint venture between Piramal Enterprises and Bain Capital Credit is in discussions to buy large assets currently under insolvency proceedings.

Billionaire Ajay Piramal-led Piramal Enterprises and private equity firm Bain Capital jointly floated a stressed asset fund in August this year to invest about USD 1 billion (Rs 6,500 crore) into stressed assets.

Piramal, Chairman of Piramal Enterprises said, “As we have said before that we will invest USD 75 million to 100 million, they will invest an equal amount. We plan to raise funds from the investors and have a fund size anywhere between USD 750 million to a billion dollars.”

There are about Rs 8.5 lakh crore worth of bad loans in the banking industry, of which 25 percent of the large corporate assets from 12 borrowers have been filed at the National Company Law Tribunal (NCLT) on Reserve Bank of India’s directions for resolution under the Insolvency and Bankruptcy Code. The RBI has further sent out a list categorising select loans comprising of about 28-30 accounts that could be tried for resolution at the NCLT after December 13 if required.

Piramal said the fund is looking at many of these and “they are all under discussions. We are looking at many sectors – steel is one, pharmaceuticals, auto and ancillaries, cement, power”.

He added, “We will put in equity and also raise debt, if the promoter is good, we may go with them but if we think the promoter should have minority stake, we will go with that.”

Speaking after the launch of Piramal Finance’s retail housing finance arm, Piramal said he does not intend to cross sell products of Shriram’s financial entities into Piramal Finance as they deal with a different category of products.

On the economy, Piramal said he does not see a slowdown. “Actually in the Piramal businesses, in the OTC space, we saw a slowdown early on in the June quarter because people were de-stocking as they were not very sure of GST. I am sure now things are coming back to normal.”

Piramal expressed optimism on the roll out of Goods and Services Tax (GST) saying, “I am very optimistic about GST. It is only going to increase the overall turnover. So people who were never paying taxes, who were doing a lot of illegal stuff, they will have a problem, otherwise organised industry should do better.”

He also briefly spoke about the roadblocks to the proposed IDFC-Shriram merger after opposition from shareholders.

With a likely chance that the deadline of 90 days for the exclusivity agreement on October 8 will be extended, Piramal said they are exploring ways to see if a merger works out on the basis of what RBI approves and on the basis of valuations.