Arcil to raise $100-300 mn from overseas market

The company in first six months has bought nearly Rs 500 cr of stressed assets from banks

Asset Reconstruction Company (India) Limited (Arcil) is looking to raise $100-300 million in the overseas market. The company will place the proposal before its board by the end of this fiscal.

"We may look at raising between $100-300 million in the overseas market. Ideally, we would like to raise as a fund," said Vinayak Bahuguna, CEO and managing director, Arcil.

In the first six months of the present financial year, Arcil bought nearly Rs 500 crore of stressed assets from banks.

This is much lower than what it used to purchase about two years ago. On a average, every year, Arcil has been acquiring stressed loans to the tune of Rs 2,000 to 2,500 crore every year from banks.

According to Bahuguna the company was going slow in buying stressed assets as the pricing was not right.

"There has to be a convergance in terms of pricing. If banks get their pricing right, they will have a way to get rid of the bad loans," he said. Since inception, Arcil has purchased bad loans worth about Rs 20,000 crore from banks, of which it has liquidated about Rs 11,000 crore.

In the first six months of the fiscal, about 16 asset reconstruction companies (ARCs) have acquired about Rs 7,000 crore of bad loans from banks.

Last year the Reserve Bank of India (RBI) mandated ARCs to invest at least 15% in securities receipts (SRs) issued by them on the purchase of distressed assets from banks. This was on account of a spurt in ARCs purchases over the previous years. This had put a brake in the business of ARCs.

Earlier, it was mandatory for ARCs to invest and hold at least 5% of the securities receipts issued by them against the assets acquired on an ongoing basis.