Insolvency Code ordinance: Promoters' loss is PEs' gain

The ordinance has barred most promoters of the defaulting firms from bidding for their assets in the bankruptcy auction

Private equity (PE) players are getting ready to bid for stressed assets, which they expect to bag at attractive valuations after an ordinance amended the Insolvency and Bankruptcy Code (IBC). The ordinance has practically barred most promoters of the defaulting companies from bidding for their assets in the bankruptcy auction.

PE players have raised distressed assets funds totalling over $4 billion in the past two years, sensing an opportunity in the increasing number of bad assets in the banking system. These include a $1.04-billion fund raised by Brookfield and SBI in July 2016 and a $1-billion fund raised by Piramal Group