KKR buys stake in IARC India

KKR plans to pool capital from two funds to purchase stressed assets in India through a partnership with the Indian International Asset Reconstruction Company.  

Private equity firm KKR has received permission from the Foreign Investment Promotion Board (FIPB) to acquire a stake in the Indian International Asset Reconstruction Company Pvt (IARC).

According to a statement, FIPB has approved the Rs 150 crore ($226 million) worth deal that will raise the total foreign holding in IARC to 78.96 percent from 58.7 percent.

Local press reported earlier that Akhil Gupta from Bharti Group will be an investor alongside KKR. KKR declined to comment beyond the statement.

“We continue to be bullish on India's growth prospects in the medium to long term. We believe an interesting way to play this theme is through the revival of stressed assets that are currently clogging the banking system,” Sanjay Nayar, chief executive officer of KKR in India, told the local news press.          

“Our stake in IARC would allow us to aggregate debt from various banks and restructure it to match earnings power of the company,” he added.

IARC engages in acquisition of non-performing loans (NPLs) from banks and resolving the assets.  The assets under management is around Rs 1,500 crore. Its major sponsors are HDFC Bank, Tata Capital Finance Services and ICICI Bank. 

KKR plans to tap its $3.3 billion global special situations fund and $6 billion Asia private equity fund to invest in these assets. KKR has been an active player in the country. The firm also teamed up with GIC and the Townsend Group to invest in a real estate non-banking financial company (NBFC) and launched its second India debt fund.

Recently, the Canada Pension Plan Investment Board (CPPIB) and private equity firm JC Flowers & Co also partnered with Kotak Mahindra Group and Ambit Holdings Pvt Ltd, respectively, to acquire stressed assets in the country.