Apollo and ICICI eye Indian distressed assets

ICICI is planning to advance its partnership with Apollo following their first joint venture, AION Capital, in 2013.  

ICICI Bank, Apollo India Credit Opportunity Management and AION Capital Management have signed a Memorandum of Understanding (MoU) to establish an asset reconstruction company (ARC) in India.

“The objective of the collaboration will be to streamline the operations of borrowers, facilitate deleveraging and arrange additional funding on a case-by-case basis,” ICICI Bank said in a statement.

This initiative will seek to revitalise distressed assets and maximise their economic value. To do this, the ARC will acquire debt exposures from lenders as well as equity stakes in companies.

The collaboration will take advantage of ICICI Bank’s experience in the Indian corporate sector and Apollo’s expertise in private equity and alternative investments including special situations.

The transactions contemplated by the MoU are subject to the negotiation and execution of definitive documentation and customary closing conditions.

The potential collaboration will be an extension of ICICI and Apollo’s joint venture, AION Capital, which will also participate in the ARC. The $825 million AION Fund is a strategic partnership between ICICI Venture and Apollo Global Management investing in both equity, debt or hybrid instruments in India.

With India sitting on a $131 billion of problem loans, banks are actively looking for resolutions for their non-performing assets. According to local press, ICICI already held a 13.26 percent stake in the Asset Reconstruction Company of India (Arcil), the country’s oldest ARC. The State Bank of India, also signed a $1 billion Memorandum of Understanding with Brookfield Asset Management, Canada’s largest alternative asset manager, to invest in stressed assets in India last month.