Edelweiss ARC to buy out bad loans by deploying $157 million

Edelweiss ARC to buy out bad loans by deploying $157 million

by Pranali Mehta

Indian financial management firm Edelweiss Asset Reconstruction Company (Edelweiss ARC) is reportedly planning to invest ₹1, 200 crores ($157 million) to acquire bad loans, chiefly from its retail asset pool for the current financial year (FY23).

The Edelweiss Group affiliate was able to peg recoveries between ₹5,000 crores ($654 million) and ₹6,000 crores ($785 million) in FY23 amidst an improving business environment. The firm’s asset under management (AUM) by the end of March 2022 was recorded at ₹40,251 crores ($5 billion).

However, with limited corporate NPAs (non-performing assets) in the market, the level of AUM is expected to decline, with many of them being resolved already. Along with that, deals are also increasingly being carried out with cash rather than with security receipts.

RK Bansal, MD and CEO, Edelweiss ARC, stated that the firm was able to make recoveries worth ₹6,903 crores ($902 million) while aiming for optimal resolution and turnaround of portfolio assets in the financial year 2022.

In FY22, the firm had invested around ₹1,308 crores ($171 million) to buy out stressed loan pools, while in FY21, when the Indian economy was disrupted by the Covid-19 outbreak, the firm’s recoveries came at around ₹5,430 crores ($710 million) and had deployed only ₹474 crores ($62 million).

Edelweiss ARC continues maintaining its position as the leader in the ARC market with a 45% share. Bansal further added that due to the requirement of improved cash flow and granularity, retail asset acquisition and resolution have become thrust areas.

While the firm’s business remains much in demand for corporate accounts, volumes have been low as many major accounts have either been resolved or gone to the National Asset Reconstruction Company that was set up by the Indian government last year.

Edelweiss ARC’s board has approved a proposal of raising funds by issuing non-convertible debentures on the basis of private placement worth ₹6,000 crores ($785 million) in one or more tranches.

Source credit: https://www.business-standard.com/article/companies/edelweiss-arc-plans-to-deploy-rs-1-200-crore-to-acquire-bad-loans-122050101070_1.html

Pranali Mehta

A chemical engineer by qualification, Pranali Mehta dutifully walked down the slated path and worked in a chemical firm for a year. Her passion for writing however, pushed her into experimenting with the same as a career. With over three years of experience in content writ Read more...