Ares SSG Funds on Thursday said it has completed acquisition of debt-ridden firm Altico Capital. The total consideration for acquiring the real estate financier stood at Rs 2,800 crore, implying a 32% haircut for lenders on a total exposure of Rs 4,100 crore.
The implementation of the resolution plan took almost a year after lenders led by State Bank of India (SBI) had approved Ares SSG’s bid in March 2020. This acquisition also marks first out-of-court resolution of a defaulting non-banking financial company (NBFC) under June 7, 2019, circular of the Reserve Bank of India (RBI).
Manish Jain, CEO at SSG Advisors LLP, an advisor to Ares SSG, said, “Ares SSG’s plan for Altico allows its creditors to realise immediate value for the assets.” It also offers all stakeholders the prospect of working with a partner that has a record of bringing capital, expertise and bespoke ideas to ensure the resolution of stressed assets and rebuilding of the underlying businesses, he added.
Last week, lenders had signed a settlement agreement with Ares SSG Capital with an aim to quickly resolve Altico Capital. Subsequent to the sale, Altico will make an application to the Reserve Bank of India to surrender its certificate of registration as a non-banking financial company. The company will forego its NBFC licence as the RBI did not provide any regulatory concessions as per sources.
Lenders had earlier signed an inter-creditor agreement to resolve Altico Capital after it faced a liquidity crunch in 2019. The company defaulted on a Rs 19-crore external commercial borrowing repayment to Mashreq Bank in September 2019, which led to a few lenders recalling their loans. Altico Capital owed more than Rs 4,100 crore to 27 lenders – State Bank of India, Bank of Baroda, UTI MF and Reliance MF, among others.