Tata Capital to pick up 20% in ARC

Tata Capital, the wholly-owned subsidiary of Tata Sons, is set to pick up close to 20 per cent stake in a recently-formed asset reconstruction company (ARC). HDFC Bank is the single largest shareholder in the firm, International Asset Reconstruction (IRC), which has assets close to Rs 500 crore.

Speaking to reporters in Bangalore on Tuesday, Praveen P Kadle, MD & CEO, Tata Capital, said they have got the Reserve Bank of India’s approval for the move and is hoping the transaction will be completed within two months. He, however, declined to specify how much the company is paying for the stake.

 

Tata Capital, which recently completed a full year of operations, has assets close to Rs 6,000 crore, with nearly Rs 4,000 crore lent to corporate finance and the rest to retail. Kadle said that they are slowly building up the book with respect to retail assets and added there are definite signs of a slowdown in the Indian economy.

“Projects at an advanced stage are going ahead while ones on the drawing board are being put off,” he noted.

Tata Capital is also looking at entering the two-wheeler financing segment, which is witnessing a slowdown. “Many established players are vacating this space and we are looking to leverage this opportunity,” Kadle said, adding that rural financing is also on the anvil.

Tata Capital, which has a capital base of Rs 2,100 crore, has borrowed around Rs 6,000 crore through various domestic instruments and is looking at bouquet of other options including retail bonds to raise resources. “Liquidity is getting tough. We are constantly evaluating options to further our expansion,” he noted.

Speaking on other new initiatives, Kadle said they are exploring three private equity fund options — a technology venture capital fund, a general growth equity fund and a mid-market PE fund. “We are yet to freeze a corpus for the PE fund and are hoping to finalise this by the year-end,” he noted.