Canada Pension to fund $450 mn in Kotak's stressed asset fund

Investment will address growing opportunity arising from current stress in banking and corporate sectors

Canada Pension Plan Investment Board (CPPIB) and Kotak Mahindra Group have inked pact for investing upto $ 525 million in stressed assets in India.

CPPIB would chip in up to $450 million while balance $ 75 million would come from Kotak Mahindra group.

S Sriniwasan, CEO, Kotak Special Situations Credit Fund, said the Kotak Mahindra Group, and its affiliate Phoenix Asset Reconstruction Company, has been an active player in the distressed and structured credit market for over a decade.

CPPIB will put patient capital to work, backed by strong and active asset management, to capitalise on the stressed assets market.

This investment will address the growing opportunity arising from the current stress in the Indian banking and corporate sectors. The fund has a flexible investment mandate providing bespoke financing solutions to companies. This was in addition mandate to invest in stressed asset sales by banks with the aim to restructure, recover and turnaround companies in distress.

Adam Vigna, Managing Director, Principal Credit Investments, CPPIB, said this investment is an important step in CPPIB's strategy to build a diversified credit business and will add to our direct credit investment capabilities in India.

Through this agreement, CPPIB will selectively invest in assets that will deliver value in line with our long-term investment mandate.

Eshwar Karra, CEO, Phoenix ARC Pvt. Ltd. Said ARC industry in India has limited capital and there is an urgent need for substantial capital to buy non-performing assets from banks, as and when these loans get sold at fair value.

This pool of capital with a flexible mandate, will work alongside the ARC, and positions us to comprehensively address the capital needs of both the borrowers and the selling lenders, he added.