Piramal-Bain ARC venture calls it quits
Piramal Enterprises Ltd and Bain Capital Credit surrendered the licence for their asset reconstruction company (ARC), India Resurgence Asset Reconstruction Company, to the Reserve Bank of India, a development that shows growing challenges in the distressed assets market, said people aware of the development.
Launched in 2018, the fund had invested in stressed assets using a mix of debt and equity.
Regulatory hurdles, including restrictions on equity sales and difficulties in providing exits to equity investors, have now made the business of ARCs less attractive.
Piramal and Bain Capital spokespeople did not respond to requests for comment.
The business for ARCs has grown tougher due to several reasons, including a shrinking asset pool as large stressed assets have diminished with non-performing loans reaching decade lows. Also, ARCs are finding it difficult to ensure increased RBI-mandated capital requirements of ₹200 crore by FY24 and ₹300 crore by FY26.
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