HDFC sells a number of distressed loans to Acre ARC

3 Oct 2022 , 09:18 AM

Acre Asset Reconstruction Co (ARC), a Hong Kong-based $8 billion alternative investment vehicle backed by Ares SSG, acquired a few loan portfolios totalling Rs1,180 crore from Housing Development Finance Corp (HDFC) in a deal that was finalized last week.

The portfolio comprises Rs430 crore in distressed Nirmal Lifestyle Kalyan and Rs730 crore to Gurugram-based Vatika Group, a real estate developer. According to news reports, Acre ARC took a 49% haircut from HDFC by paying Rs602 crore in an all-cash purchase.

Insolvency proceedings against Nirmal Lifestyle Kalyan, a subsidiary of Mumbai-based Nirmal Lifestyle, have been accepted by a bankruptcy court in Mumbai as a result of a claim by Srei Equipment Finance that the company had defaulted on around Rs84 crore worth of debt. However, the business has contested the ruling and is attempting to pay back the debt.

Prior to this, HDFC had requested counteroffers that would surpass Acre ARC’s base offer of Rs602 crores at a 5% markup (Rs632 crores). The loans were sold to Acre ARC since no new offers were submitted.

Asset reconstruction firms typically purchase debt at a discount with the intention of recovering more money than they paid for the loans.

Acre ARC will either pay service providers a charge in order to recover or restructure these loans, or it will work with the borrowers to come up with a feasible repayment plan.

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