IndoStar Capital sells two builder loans to Phoenix ARC
IndoStar Capital Finance has sold to Phoenix Asset Reconstruction Company two stressed loans of Puranik Builders and Kanakia Spaces Realty for ₹790 crore, which is an 86% recovery on the total loan outstanding of ₹915 crore, according to sources.
The recovery rate is considered good given that these loans were overdue by around 60 days. «The recovery was good as the loan accounts were tagged in stage 2 and chances of recovery are strong,» said a source.
Non-banking finance companies (NBFCs) categorise loans as stage 2 if the overdue period is between 30 and 60 days.
Classification of borrower accounts occurs during the day-end process for the specified date.
Spokespersons of Kotak Mahindra Bank-backed Phoenix ARC and IndoStar did not immediately respond to ET's request for comment. Under the agreement, Phoenix ARC will set up a trust that will monitor the progress of the real-estate projects of Puranik Builders and Kanakia Spaces Realty and will also consider part funding the completion of these projects.
Phoenix ARC has set up a special purpose trust for acquiring the two loans, contributing 13.044% of the security receipts from the securitisation trust. The remaining 86.956% of security receipts were issued to IndoStar as part of the loan sale.
According to the sources, Phoenix ARC has set a five-year plan to address the loan and redeem the security receipts from the securitisation trust. On August 23, IndoStar invited counter bids to Phoenix ARC's offer under the Swiss Challenge Method.
However, no ARC showed interest. The sale concluded on August 25.
The NBFC took a decisive step forward in its stated retailisation strategy by selling a significant portion of its legacy corporate loan book to Phoenix ARC, according to
