Ambit plans stressed assets biz, NBFC

The stressed asset business will be a mix of an ARC and a distressed asset fund.

Ashok Wadhwa-promoted Ambit Holdings is planning to start a stressed asset business and a non-banking finance company (NBFC) by the end of this financial year. The stressed asset business would be a combination of an asset reconstruction company (ARC) and a distressed asset fund.

“We would be into buying debt like a regular ARC, but we would also provide equity and management support,” said Ambit Holdings partner and Chief Executive Officer (CEO) Wadhwa.

Ambit has already started insurance brokerage and equity research and sales businesses this year. It closed a $100-million private equity fund called Ambit Pragma Ventures recently. It is also keen on starting proprietary trading.

Earlier this week, Every new venture we are planning is only to support our core investment banking business. Vaibhav Sanghvi and Piyush Shah, who were part of DSP Merrill Lynch’s proprietary trading team, also moved to Ambit.

“Every new venture we are planning is only to support our core investment banking business,” Wadhwa said.

Asset reconstruction firms buy bad debt in a pool format at a discount and recover the money from the borrowers subsequently.

Many companies, including Reliance Capital, Kotak Mahindra, Pegasus and Edelweiss, are foraying into the segment anticipating a spurt in the pool of sticky assets in the wake of the economic slowdown.

Loan growth of nearly 30 per cent in India over the past few years has resulted in the creation of non-performing assets (NPAs), thereby giving an opportunity to banks and other financial institutions.

Ambit has approached the Reserve Bank of India (RBI) for starting the NBFC business, which would target corporate clients and stay away from consumer financing.

Mergers and acquisitions have come down significantly this year, and domestic investment banks are diversifying to sail through such turbulent times.

From the core investment banking business, Ambit has already diversified into capital market (Ambit Capital) and private equity (Ambit Magna) businesses.

Now, NBFC and ARC are two new areas the company is all set to foray into.