Edelweiss ARC plans to deploy Rs 1,200 crore to acquire bad loans

Edelweiss Asset Reconstruction Company (Edelweiss ARC) plans to deploy Rs 1, 200 crore in buying out bad loans, mainly from the retail asset pool in the current financial year (FY23).

With improving business environment, it has pegged recoveries to between Rs 5,000 crore and Rs 6,000 crore in FY23. Its assets under management (AUM) stood at Rs 40,251 crore at the end of March 2022.

The scale of AUM is expected to decline as a few corporate NPAs are now in the market. This is because most of them have been resolved. Deals are also increasingly being done in cash instead of security receipts.

R K Bansal, managing director and chief executive, Edelweiss ARC, said the company made recoveries worth Rs 6,903 crore with focus on optimal resolution and turnaround of portfolio assets in FY22. It invested about Rs 1,308 crore in picking up stressed loan pools during FY22.  

In FY21, when the Indian economy was devastated by the first wave of Covid, the ARC’s recoveries were worth Rs 5,430 crore and it deployed (invested) only Rs 474 crore.

The company continues to maintain market leadership position with a share of about 45 per cent in the ARC space. Considering the need for granularity and improved cash flow, retail asset acquisition and resolution are thrust areas, Bansal said.

The ARC remains active in the big-ticket arena, that is, corporate accounts. But volumes are low, given that many big accounts have been resolved or are going to the National Asset Reconstruction Company.  

Its board has approved a proposal to raise funds by issuing non-convertible debentures — aggregating Rs 6,000 crore — on a private placement basis. This will be in one or more tranches.

In FY22, the company booked a total income of Rs 899.27 crore (Rs 867.38 crore in FY21). Net profit of the company was Rs 252.67 crore (Rs 185.63 crore in FY21)