US-based Avenue Capital has proposed to acquire 27 per cent in Asset Reconstruction Company (Arcil) from a clutch of six existing investors for undisclosed amount to become the single largest shareholder in the company.

The six institutions that would exit Arcil include IDFC Bank (8.37 per cent), Lathe Investments Pte Ltd (9.90 per cent), South Africa-based First Rand Bank (4.11 per cent), Barclays Bank (1.50 per cent), Karur Vysaya Bank (1.96 per cent) and Quivco Enterprises (1.35 per cent).

Arcil, which manages distressed asset worth ₹12,000 crore, expects the deal to be completed in the next quarter.

With the networth of ₹1,700 crore, Arcil plans to raise ₹1,500 crore in next six months to tap the opportunity in distressed small and medium-size companies.

Vinayak Bahuguna, Managing Director, Arcil, said though there is a steady inflow of ₹500 crore a year from the asset portfolio and ₹700 crore of credit line, the company will raise fund for the next growth phase.

Asked why the existing shareholders are quitting, he said some of them have stayed with Arcil for long and found that their shareholding is not significant.

Arcil has executed deals worth ₹2,700 crore last fiscal and expects to double it in FY’19. Though execution of deals is slow at ₹600 crore this fiscal, he said it always catches momentum in the second half.

The asset reconstruction company has put the erstwhile Daewoo Motors plant in Noida on block with a base price of ₹700 crore and the machinery to be sold on scrap alone is worth ₹100 crore.

Along with other partners, it expects to takeover a distressed mid-size steel and textile companies in couple of weeks and has separately placed a bid with a bank to takeover 50 per cent of distressed SME loan book of about ₹2 lakh crore.

The merger of banks would speed up cleaning up of distressed book and throw up fresh opportunity, he said.

With the insolvency process taking shape, Bahuguna said banks are trying to use the distressed asset auction for price discovery.

“After rejecting our bid in one of the auctions, a bank managed to realise only 60 per cent of our offer by taking the company to NCLT,” he said.

Arcil had logged net profit of ₹123 crore last fiscal against ₹46 crore in FY’17 and expects it to increase substantially this fiscal on the back of asset monetisation.

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