Edelweiss says open to buying stressed assets from ‘bad bank’

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Far from seeing the National Asset Reconstruction Company Ltd (NARCL), the so-called bad bank, as a rival, Edelweiss Asset Reconstruction Company Ltd (EARC), currently India’s largest ARC, wants to buy stressed assets from it.

Edelweiss Alternative Asset Advisors (EAAA), EARC’s sister company, is exploring the possibility of raising funds, exceeding the $1.3 billion (about ₹9,200 crore) it raised about two years back, to invest in stressed assets to turn them around.

Raj Kumar Bansal, MD & CEO, EARC, told BusinessLine that EARC and EAAA can join forces to buy some of the assets from NARCL even as they observe the arm’s length principle.

EARC can invest 15 per cent of the acquisition price of the stressed asset, with EAAA investing 85 per cent. EARC and EAAA are subsidiaries of Edelweiss Financial Services Ltd.

Faster debt aggregation

Bansal said the setting up of NARCL augurs well for all ARCs as it saves them a year that it usually takes to aggregate debt from multiple lenders. There are 28 ARCs registered with the Reserve Bank of India.

NARCL has been set up by banks to aggregate and consolidate stressed assets for their subsequent resolution. Public sector banks (PSBs) will have 51 per cent ownership in NARCL, with Canara Bank holding 12 per cent stake, as its sponsor. To begin with, banks have identified 22 fully provisioned stressed accounts, including VOVL Ltd (wholly-owned subsidiary of Videocon Industries), Amtek Auto, Reliance Naval and Engineering, Jaypee Infratech, Castex Technologies, GTL, Visa Steel, and Lavasa Corporation, aggregating ₹82,500 crore, for transfer to NARCL.

NARCL will acquire stressed assets, aggregating about ₹2-lakh crore, from lenders in phases. It will acquire these assets by paying 15 per cent of the acquisition value in cash and 85 per cent as security receipts (SRs).

Bansal, who oversees Assets Under Management aggregating about ₹43,000 crore, said: “It is good for us if they (NARCL) aggregate the debt because then we can buy from them. We don’t have to deal with 20 banks. Depending on the quality of the asset, where there is reasonable scope for us to resolve and where, maybe, we can work with the borrower, we can buy it from NARCL.”

In the first quarter of the current fiscal, EARC acquired assets worth about ₹2,100 crore by deploying ₹380 crore. EAAA had AUM aggregating about ₹30,000 crore as at March-end 2021.

The RBI has also allowed loan exposures classified as fraud to be transferred to ARCs. This comes in the wake of banks reporting frauds aggregating ₹3.95-lakh crore between FY19 and FY21. Stressed loans, which are in default for more than 60 days or are classified as non-performing assets, can be transferred to ARCs.

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RBI lifts PCA curbs on Indian Overseas Bank, BFSI News, ET BFSI

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The Reserve Bank of India today lifted Prompt Corrective Action restrictions from the Indian Overseas Bank, the central bank said in a release.

The decision came after the bank reported its earnings for the year ended March 31, 2021, and the RBI observed that IOB was not in breach of the PCA parameters.

IOB has also provided a written commitment that it would comply with the norms of Minimum Regulatory Capital, Net NPA and Leverage ratio on an ongoing basis and has said that it would make structural and systemic improvements, RBI said in the release.

The RBI has said that it will continue monitoring the bank.

PCA is triggered when banks breach regulatory norms such as return on asset, minimum capital, among others.

Earlier this month, RBI had lifted PCA restrictions on UCO Bank. Now, only Central Bank of India remains in the list.



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Reserve Bank of India – Press Releases

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The performance of the Indian Overseas Bank, currently under the Prompt Corrective Action Framework (PCAF) of RBI, was reviewed by the Board for Financial Supervision. It was noted that as per its published results for the year ended March 31, 2021, the bank is not in the breach of the PCA parameters. The bank has provided a written commitment that it would comply with the norms of Minimum Regulatory Capital, Net NPA and Leverage ratio on an ongoing basis and has apprised the RBI of the structural and systemic improvements that it has put in place which would help the bank in continuing to meet these commitments.

Taking all the above into consideration, it has been decided that Indian Overseas Bank is taken out of the PCA restrictions subject to certain conditions and continuous monitoring.

(Yogesh Dayal)     
Chief General Manager

Press Release: 2021-2022/953

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Reserve Bank of India – Press Releases

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The Reserve Bank of India (RBI) has imposed, by an order dated September 29, 2021, a monetary penalty of ₹2.50 lakh (Rupees two lakh fifty thousand only) on The Madura Sourashtra Co-operative Bank Ltd. (A-336) for non-adherence / violation of directions issued under Supervisory Action Framework (SAF). This penalty has been imposed in exercise of powers vested in RBI under the provisions of Section 47 A (1) (c) read with Section 46 (4) (i) and Section 56 of the Banking Regulation Act, 1949, taking into account the failure of the bank to adhere to the aforesaid directions issued by RBI.

This action is based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers.

Background

The inspection report of the bank based on its financial position as on March 31, 2020 revealed inter alia, violation / non-compliance with directions issued under Supervisory Action Framework (SAF). Based on the same a Notice was issued to the bank advising it to show cause as to why penalty should not be imposed for non-compliance with the directions.

After considering the bank’s reply and oral submissions during the personal hearing, RBI came to the conclusion that the aforesaid charges of non-compliance with RBI directions were substantiated and warranted imposition of monetary penalty.

(Yogesh Dayal)     
Chief General Manager

Press Release: 2021-2022/951

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Exotel raises $35 million funding from IIFL AMC, Sistema Asia Fund, others, BFSI News, ET BFSI

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Customer communication platform Exotel on Wednesday said has raised USD 35 million (about Rs 259.5 crore) in funding from IIFL AMC, Sistema Asia Fund, CX Partners, Singularity Growth Opportunities Fund and others.

Existing investors, Blume ventures and A91 capital along with angel investors also participated in the series C round, a statement said.

Arun Sarin, former CEO of Vodafone, has also joined the round as an angel investor and a mentor, it added.

The fresh funds will be used primarily to boost the growth of the company, it said.

“We’re investing heavily in building the market’s first vertically integrated full-stack engagement suite with interoperability of channels and convergence of customer data to enable enterprises to have multimodal conversations with customers. We are going to be expanding our team and doubling our headcount over the next 12 months,” Exotel CEO and co-founder Shivakumar Ganesan said.

Exotel, which had recently announced a merger with Ameyo, said the organisation is currently growing at 70 per cent year-on-year and is at an ARR (annual run rate) of USD 45 million. Exotel is looking to hit an ARR of 200 million USD over the next five years.

“CPaaS (Communications Platform as a Service) is a USD 6 billion market in India and SEA (South East Asia) and one of the fastest growing technology areas in the post-COVID world. Exotel has quietly emerged as the CPaaS platform of choice in India through their market-best reliability and comprehensive product suite,” Sumit Jain, Senior Partner at Sistema Asia Fund, said.



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Exotel raises $35 million funding from IIFL AMC, Sistema Asia Fund, others, BFSI News, ET BFSI

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Customer communication platform Exotel on Wednesday said has raised USD 35 million (about Rs 259.5 crore) in funding from IIFL AMC, Sistema Asia Fund, CX Partners, Singularity Growth Opportunities Fund and others.

Existing investors, Blume ventures and A91 capital along with angel investors also participated in the series C round, a statement said.

Arun Sarin, former CEO of Vodafone, has also joined the round as an angel investor and a mentor, it added.

The fresh funds will be used primarily to boost the growth of the company, it said.

“We’re investing heavily in building the market’s first vertically integrated full-stack engagement suite with interoperability of channels and convergence of customer data to enable enterprises to have multimodal conversations with customers. We are going to be expanding our team and doubling our headcount over the next 12 months,” Exotel CEO and co-founder Shivakumar Ganesan said.

Exotel, which had recently announced a merger with Ameyo, said the organisation is currently growing at 70 per cent year-on-year and is at an ARR (annual run rate) of USD 45 million. Exotel is looking to hit an ARR of 200 million USD over the next five years.

“CPaaS (Communications Platform as a Service) is a USD 6 billion market in India and SEA (South East Asia) and one of the fastest growing technology areas in the post-COVID world. Exotel has quietly emerged as the CPaaS platform of choice in India through their market-best reliability and comprehensive product suite,” Sumit Jain, Senior Partner at Sistema Asia Fund, said.



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Exotel raises $35 million funding from IIFL AMC, Sistema Asia Fund, others, BFSI News, ET BFSI

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Customer communication platform Exotel on Wednesday said has raised USD 35 million (about Rs 259.5 crore) in funding from IIFL AMC, Sistema Asia Fund, CX Partners, Singularity Growth Opportunities Fund and others.

Existing investors, Blume ventures and A91 capital along with angel investors also participated in the series C round, a statement said.

Arun Sarin, former CEO of Vodafone, has also joined the round as an angel investor and a mentor, it added.

The fresh funds will be used primarily to boost the growth of the company, it said.

“We’re investing heavily in building the market’s first vertically integrated full-stack engagement suite with interoperability of channels and convergence of customer data to enable enterprises to have multimodal conversations with customers. We are going to be expanding our team and doubling our headcount over the next 12 months,” Exotel CEO and co-founder Shivakumar Ganesan said.

Exotel, which had recently announced a merger with Ameyo, said the organisation is currently growing at 70 per cent year-on-year and is at an ARR (annual run rate) of USD 45 million. Exotel is looking to hit an ARR of 200 million USD over the next five years.

“CPaaS (Communications Platform as a Service) is a USD 6 billion market in India and SEA (South East Asia) and one of the fastest growing technology areas in the post-COVID world. Exotel has quietly emerged as the CPaaS platform of choice in India through their market-best reliability and comprehensive product suite,” Sumit Jain, Senior Partner at Sistema Asia Fund, said.



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CredAvenue raises $90 million in Series A funding

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CredAvenue, a leading debt marketplace, on Wednesday raised $90 million in Series A equity funding round led by Sequoia Capital India and co-led by Lightspeed, TVS Capital Funds, Lightrock among others.

The equity funding, which also saw the participation of CRED and Stride Ventures as investors, values CredAvenue at approximately $410 million.

“CredAvenue’s goal is to transform debt markets by deepening access to capital for the growing enterprise sector to unlock significant economic growth. We are delighted to welcome the Series A investors to our journey. They will catalyse our mission with capital and guidance, to keep expanding our lead in this market,” Gaurav Kumar, Founder & CEO, Cred Avenue told BusinessLine.

Debt financing platforms

CredAvenue facilitates debt financing for enterprises by connecting lenders and investors with corporate borrowers through a digital platform.

Also see: CredAvenue facilitates ₹337.5-crore debenture issue from Spandana Sphoorty

Its offering includes a wide range of debt products under five platforms — CredLoan (loan platform); CredCoLend (co-lending platform for banks and NBFCs); Plutus (Bond Platform); CredSCF (Supply Chain & Trade Financing solutions) and CredPool (Pool Platform for end-to-end securitization and portfolio buyouts).

“CredAvenue’s platform can provide institutional investors access to larger liquidity pools at market-efficient rates and faster transaction times. The platform is facilitating larger participation of retail investors in the corporate debt market, which is driving financial inclusion in the fixed income category. We are convinced that CredAvenue can be the leader in this transformative journey of Indian debt markets,” Gopal Srinivasan, Chairman at TVS Capital Funds.

$9 billion throughput

Founded in 2020, CredAvenue has already facilitated more than $9 billion worth of transactions on its platform, on-boarding over 1,500 institutional borrowers and more than 750 investors touching over a million end retail borrowers.

“We are proud to share that over 45 per cent of the $9 billion throughput on the platform has come to enterprises which are A- and below,” Kumar said, adding, “Our platform stood the test of the times. The entire asset quality and how things have fared for investors has been simply outstanding. That is what made investors trust us more and more.”

Also see: Exotel raises $35 million in series C funding

“CredAvenue is a unique solution that not only simplifies access to credit for borrowers ranging from a BB to AA rating but also improves access to multiple debt products like bonds, supply chain financing, etc. We believe it has the opportunity to become the platform of choice for borrowers and lenders operating in the debt market,” Sakshi Chopra, MD, Sequoia India, said in a press release.

Expansion plans

The company is planning to use the current funding towards expanding product capabilities and ramping up the platform’s technology and data science infrastructure. The company aims to invest heavily in data science, machine learning and artificial intelligence over the next few months to significantly improve and expand its product offerings, across each of its sub-platforms.

The debt platform is also planning to double its head count to 700 by the end of FY22 besides looking at global expansion and inorganic growth through strategic acquisitions.

Avendus Capital was the exclusive financial advisor to CredAvenue on the transaction.

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Aditya Birla Sun Life AMC IPO subscribed 56% on Day 1, BFSI News, ET BFSI

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NEW DELHI: The initial public offering (IPO) of Aditya Birla Sun Life AMC saw steady response from investors on the first day of bidding on Wednesday.

By 5:00 pm, the issue saw applications for 1,54,80,400 shares against the issue size of 2,77,99,200 shares. This implies subscription of 56 per cent.

The company and its promoters plan to raise Rs 2,768 crore from the market. The initial share-sale is entirely an offer for sale, wherein two promoters — Aditya Birla Capital and Sun Life (India) AMC Investments — will divest their stake in the asset management firm.

Considering the TTM (trailing twelve month) adjusted EPS of Rs 20.27 on post issue basis, the company is going to list at a P/E of 35.13 with a market cap of Rs 20,505 crore, noted analysts. Its peers namely HDFC AMC and Nippon Life are trading at a P/E of 50 and 39, respectively.

Most analysts have a ‘subscribe’ rating.

“We assign ‘subscribe’ rating to this IPO as the company is the largest non-bank affiliated asset manager in India with diverse product portfolio and geographically diversified pan-India distribution presence. Also, the company is available at reasonable valuation as compared to its peers,” said Saurabh Joshi of Marwadi Shares and Finance.

Aditya Birla Sun Life AMC is ranked as the largest non-bank affiliated AMC in India and among the four largest AMCs in India by quarterly average assets under management. The company managed a total AUM of ₹2,93,642 crore as of June.



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