Varde, Aditya Birla to Create $1 Billion Joint Venture

U.S.-based investment firm Varde Partners Inc. and Indian financial services provider Aditya Birla Capital Ltd. are creating a joint venture to invest in “stressed and distressed” assets in India. Birla Capital’s shares rose.

Minneapolis-based Varde will take a 50 percent stake in Birla Capital’s asset reconstruction business for 980 million rupees ($13.9 million), the Indian firm said in a filing, which didn’t specify the size of planned investments. People familiar with the matter had said earlier that the venture plans to put as much as $1 billion into Indian distressed assets over three years.

Varde, which manages $14 billion of assets, joins overseas investors from Blackstone Group LP to Oaktree Capital Group LLC drawn by India’s efforts to resolve $210 billion in soured loans. The scramble among local lenders to sell assets intensified after the central bank last year forced about 40 large defaulters into bankruptcy courts and then set stringent deadlines for stressed accounts to be restructured or share the same fate.

The partners “also expect to establish a jointly owned and controlled investment advisor entity” in the next one year, the filing said.

Shares of Birla Capital, helmed by billionaire Kumar Mangalam Birla, rose as much as 4.8 percent on Thursday, the biggest intraday gain since July 26. That compared with a 0.1 percent slump in the broader S&P BSE Sensex.

Varde Co-Chief Investment Officer Ilfryn Carstairs had called the India distressed opportunity one of the biggest in the world, in a September 2017 interview. Carstairs said that he saw systemic opportunities in India, adding that its soured loans problems were comparable to Italy and Spain.

Birla Capital’s asset reconstruction business focuses on bad loans to micro, small and medium firms. – Bloomberg

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