Omkara ARC to buy Rs 6K cr NPA book of Stressed Asset Stabilisation Fund

After the revision in reserve price, NARCL and Omkara ARC put in binding bids to acquire the portfolio of NPAs, and subsequently, an auction was conducted to determine the winning bidder

Omkara Asset Reconstruction Company (ARC) has emerged as the winning bidder to acquire non-performing assets (NPAs) worth Rs 6,151.16 crore from the Stressed Asset Stabilisation Fund (SASF) of the erstwhile Industrial Development Bank of India (IDBI), according to a source close to the development. 
 

Omkara ARC — which acquired Park Hyatt Hyderabad's bad loans in March — and state-owned National Asset Reconstruction Company Limited (NARCL) were the front runners to acquire the NPA portfolio. An email sent to Omkara ARC did not elicit a response till press time.
 

Both NARCL and Omkara ARC had bid the reserve price of Rs 642 crore. Bidding took place between the two on August 3 and Omkara ARC increased its offer to Rs 652 crore, and was declared the winner, the source added.
 

SASF is a government-formed special purpose vehicle for acquiring and managing the assets of the erstwhile IDBI and has the mandate to recover its dues. The tenure of SASF shall come to an end by September 30, 2024.
 

In May, SASF invited Expressions of Interest (EoIs) from interested parties to acquire Rs 6,151 crore worth of bad loans across 239 accounts, with a reserve price set at Rs 713 crore, targeting a recovery of 11.59 per cent. It had appointed EY as the process advisor for assisting with the proposed sale of the NPA portfolio, according to an auction notice on SASF's website.
 

Of the 239 accounts, 81 included tangible securities and guarantees with a gross principal outstanding of Rs 2,179.51 crore, while the remaining 158 accounts had guarantees and claims with a gross principal outstanding of Rs 3,971.65 crore, the auction notice said.
 

Initially, SASF received 18 EoIs from NARCL, Omkara ARC, Phoenix ARC, Prudent ARC, CFM ARC, and JC Flowers ARC, among others. However, it failed to garner any binding bids, prompting it to cut the reserve price to Rs 642 crore from Rs 713 crore.

After the revision in reserve price, NARCL and Omkara ARC put in binding bids and subsequently an auction was conducted.

What was on offer?

·         239 accounts with gross principal outstanding of Rs 6,151 crore

·         81 accounts include tangible securities and guarantees with outstanding of Rs 2,179 crore

·         The rest include guarantees and claims with outstanding of Rs 3,971 crore

·         SASF had set a revised reserve price of Rs 642 crore for the NPA portfolio

·         Ernst & Young was appointed as the process adviser for the sale process