HDFC sells a number of distressed loans to Acre ARC

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Acre Asset Reconstruction Co (ARC), a Hong Kong-based $8 billion alternative investment vehicle backed by Ares SSG, has acquired a few loan portfolios totaling Rs 1,180 crore from Housing Development Finance Corp (HDFC) in under a deal that was finalized last week.

The portfolio includes Rs430 crore from distressed Nirmal Lifestyle Kalyan and Rs730 crore from Vatika Group, a Gurugram-based property developer. According to reports, Acre ARC took a 49% haircut from HDFC by paying Rs602 crore in an all-cash purchase.

Insolvency proceedings against Nirmal Lifestyle Kalyan, a Mumbai-based subsidiary of Nirmal Lifestyle, have been accepted by a Mumbai bankruptcy court following a claim by Srei Equipment Finance that the company defaulted on a debt of around Rs 84 crore. However, the company has challenged the decision and is trying to repay the debt.

Previously, HDFC had requested counter-offers that would exceed Acre ARC’s base offer of Rs602 crores with a mark-up of 5% (Rs632 crores). The loans were sold to Acre ARC as no new offers were submitted.

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

Acre ARC will pay fees to service providers to collect or restructure these loans, or work with borrowers to come up with a workable repayment plan.


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