HDFC: Acre ARC buys a handful of distressed loans from HDFC

Mumbai: The $8 billion Hong Kong-based alternative investment fund Ares SSG, backed by Acre Asset Reconstruction Co (ARC), bought a handful of loan portfolios from Housing Development Finance Corp (HDFC) totaling 1,180 ₹ crores under a deal reached last week.

The portfolio includes loans to Gurugram-based property developer Vatika Group (₹730 crore) and troubled Nirmal Lifestyle Kalyan (₹430 crore). Acre ARC paid ₹602 crore in an all-cash deal, representing a 49% discount to HDFC, a person familiar with the deal said.

“Vatika Group has huge plots of land under development both in Gurugram and Jaipur which have great potential for recovery. This loan has already been restructured twice so HDFC did not want to keep it in his books The Nirmal Lifestyle project in Kalyan, on the other hand, has stalled and is facing a shortage of cash which will require new funds to revive,” said the person, who did not wish be identified.

A Mumbai bankruptcy court has admitted an insolvency petition against Nirmal Lifestyle Kalyan, the Mumbai-based arm of Nirmal Lifestyle, following a plea from Srei Equipment Finance which said the company had defaulted on its insurance dues. worth about ₹84 crore. However, the company had disputed the order and was seeking to settle dues, ET reported in June.

“These sales by HDFC are also a clean up ahead of the proposed merger with the Reserve Bank of India (RBI) as regulations are stricter on direct real estate exposure,” the person said.

HDFC and Acre ARC did not respond to questions emailed by ET.

Earlier, HDFC had called for counter-bids to top Acre ARC’s base bid of ₹602 crore with a markup of 5% (₹632 crore). As no new offers were received, the loans were sold to Acre ARC.

Asset reconstruction companies typically buy debt at a discount in an effort to recover more than they paid for the loans.

Acre ARC will recover or restructure these loans either by paying fees to service providers or by working with borrowers to find a workable repayment schedule.

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