5 June 2019: Goldman Sachs Group Inc and Asian distressed credit specialist SSG Capital Management are in separate talks to buy about Rs 2,500-3,500 crore worth of bad loans at RattanIndia Power, where lenders are planning to sell a part of their exposure to the debt-laden energy firm in the current round of negotiations.
In September last year, state-run Power Finance Corp (PFC) filed an insolvency plea against Rattan India Power, formerly known as Indiabulls Power, to recover unpaid dues. The company has defaulted on about Rs 20,000 crore of loans. Besides PFC, lenders to Rattan India include State Bank of India, Bank of India, Axis Bank, Bank of Baroda, and IDBI Bank.
There are other contenders for the portfolio besides the two private-equity financiers, two finance industry executives aware of the talks told ET.
“We are negotiating and hope to see some portion of the debt taken over,” said one of the persons cited above. “This would be big relief to the lenders as they are struggling to find a solution for such cases in the energy space.”
Goldman Sachs, SSG and RattanIndia Power didn’t respond to ET’s mailed queries until the publication of this report.
RattanIndia has two under-construction thermal power plants at Nashik and Amravati in Maharashtra.
Financing of power assets and recovery of loans stuck in these projects have become rather challenging after the Supreme Court struck down a crucial central bank order, which had given defaulting companies 180 days to concur on a resolution plan with lenders or face bankruptcy courts for unpaid debt of at least Rs 2,000 crore.
Goldman Sachs has been active of late in India’s special situations space. ET reported on May 29 that Goldman is in talks to buy up to Rs 2,000 crore exposure of the Piramal Group in real-estate firm Lodha Developers, which builds top-end properties in Mumbai and downtown London.
Founded in 2009 by Edwin Wong, Andreas Vourloumis and Shyam Maheshwari, former top Lehman Brothers bankers, SSG manages more than $2 billion across Asia. The firm focuses on assets in China, India and Southeast Asia. SSG is seeking to raise another $2 billion special situations fund to invest across its focused territories in Asia.
Private equity funds and special situation credit specialists are scanning the Indian landscape to buy into one of the world’s largest distressed debt markets. India’s banking sector, dominated by state-run lenders, is seeking to extricate about $210billion stuck in bad loans, the central bank’s recent estimates showed.
“New asset classes, such as Alternative Investment Funds and distressed-asset management, have increasingly gained traction in the Indian market, aided by government regulations and tax breaks,” Bain & Co said in its India Private Equity Report in May.