Singapore's Broad Peak, partner to invest $300 mn in Indian stressed assets

Singapore’s Broad Peak Investment Advisers on Monday said it would work with a Mumbai-based company to invest up to $300 million in India’s stressed assets market, signaling the government’s decision to set up a bad bank is attracting global investors in the special situation space.

Broad Peak, in association with fund Brescon & Allied Partners, will seek turnaround opportunities, debt resolution litigation financing and other businesses. Brescon specialises in services related to financial and corporate restructuring, and other advisory services. It is works in divestment advisory, mergers and acquisitions advisory, structured financing solutions and insolvency services under the purview of Insolvency and Bankruptcy Code (IBC).

“This strategic arrangement between the two firms aims at improving the scale of the business between them as well as enhancing the agility with which these situations are identified, resolved, structured and funded," said the companies in a joint statement.

The alliance will also bring "patient capital" to companies in need, said Nirmal Gangwal, founder and managing partner of Brescon.

“This arrangement is a perfect combination of global capital backing local knowledge to achieve a win-win situation. The current arrangement with Broad Peak is a precursor to Brescon’s ambition of raising a dedicated special situation fund from LPs spanning both domestic and foreign investors,” Gangwal said.

Through this partnership, Broad Peak expects to enhance its access to special situations in India using Brescon’s track record in identifying and evaluating a range of special situation opportunities over many years, according to Sandeep Gupta, managing director at Broad Peak.

The banking system’s legacy bad assets is estimated at around Rs 2.2 trillion. The National Asset Reconstruction Company (NARCL)—bad bank in popular language--will take over 70 legacy assets, and will seek help of external experts to resolve the debt. Therefore, advisory services have wide scope to play in the space, even as they can also get into the bad debt space directly.  

The private asset reconstruction companies, however, are tied up with many restrictions. A committee recently suggested that these firms be allowed to bid for assets directly during IBC proceedings.