Resolution road: Altico Capital files for ownership change to Hong Kong-based SSG Capital

Published: July 18, 2020 6:15 AM

Altico Capital was faced with a liquidity crunch in 2019. It defaulted on a Rs 19-crore external commercial borrowing (ECB) repayment to Mashreq Bank in September 2019, which led to a few lenders recalling loans.

Lenders to Altico Capital had earlier voted in the favour of a resolution plan submitted by special situations fund SSG Capital.

By Ankur Mishra

Altico Capital on Friday filed an application with the Reserve Bank of India (RBI) to transfer the ownership to Hong Kong-based SSG Capital from existing investors — Clearwater Capital Partners, Varde Partners and Abu Dhabi Investment Council (ADIC).

Lenders to Altico Capital had earlier voted in the favour of a resolution plan submitted by special situations fund SSG Capital, which offered Rs 2,754 crore for the non-banking financial company (NBFC), against the total debt of Rs 4,300 crore. Additionally, Rs 354 crore has been promised in the form of security receipts, as per the resolution plan. The change in ownership will pave the way for the first NBFC resolution under June 7, 2019, circular of RBI.

Although the deal was closed in March, employees of Altico Capital had subsequently raised issues about SSG Capital’s proposed takeover of the company to the regulator. FE has learned that employees of the company had raised concerns to RBI about winding up of Altico Capital by the new owner. According to sources, all the concerns of the employees have been addressed.

FE has also learned that RBI has advised a leading private bank to pay back Rs 210 crore to the UAE-headquartered Mashreq Bank in the matter related to Altico Capital. Altico had complained to the RBI that the private bank had violated regulations by debiting funds intended for repayment to Mashreq Bank. The said private bank netted off the Rs 210 crore held by Altico in the bank’s fixed deposits against outstanding term loans which the real estate financing company owed to the lender. The private bank acted as a primary dealer for Altico Capital in an external commercial borrowing deal with Mashreq Bank, as per sources. The Rs 210 crore received as part of that financing deal was held with private lender in the form of a fixed deposit.

Altico Capital was faced with a liquidity crunch in 2019. It defaulted on a Rs 19-crore external commercial borrowing (ECB) repayment to Mashreq Bank in September 2019, which led to a few lenders recalling loans. Later, lenders formed a committee to execute a resolution plan under the RBI’s June 7 circular by signing an inter-creditor agreement (ICA). Altico Capital owed over Rs 4,300 crore to 27 lenders led by State Bank of India, Bank of Baroda, UTI MF and Reliance MF, among others.

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