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K Ram Kumar
India SME Asset Reconstruction Company (ISARC) shareholders, led by the Small Industries Development Bank of India (SIDBI), plan to divest 86.40 per cent or more stake in the company.
ISARC’s major shareholders include SIDBI (15 per cent), SIDBI Venture Capital (11 per cent), Bank of Baroda and United Bank of India (10 per cent each), Life Insurance Corporation of India (LIC), Punjab National Bank (9 per cent each), and Punjab and Sind Bank (5 per cent).
UCO Bank, Bank of Maharashtra, Syndicate Bank, Corporation Bank, Dena Bank, Union Bank of India and Allahabad Bank have 4 per cent stake each in ISARC. Oriental Bank of Commerce has a 1.50 per cent stake.
The move to sell the stake in the asset reconstruction company comes in the backdrop of state-owned financial intermediaries looking at ways to monetise their non-core assets to strengthen their capital base and asset reconstruction business becoming capital-intensive with lenders preferring asset sales in cash.
“There could be buying interest from either an existing large ARC or foreign investors as the business potential in the asset reconstruction space is huge,” said a senior public sector bank official.
That foreign investors are evincing interest in the Indian stressed assets space is underscored by the fact that PwC, in a December 2018 report, said that in an effort to establish their footprint in the distressed space, private equity funds and sovereign wealth funds are tying up with ARCs and setting up distressed funds.
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