KKR & Co. L.P., formerly known as Kohlberg Kravis Roberts & Co, has become first foreign foreign investor to fully own an Asset Reconstruction Company (ARC) in India
The decision has come when the lenders in India are struggling with a pile of bad loans that have crippled their businesses.
KKR plans to deploy a major chunk from its record Asia fund for buying troubled assets in the country
The Banks and an ARC get into an agreement in which the ARC take over the NPAs from the Banks Balance Sheet at a certain amount, lower than the Book Value. After this process, the particular ARC try to recover this amount from the borrowers. Read More
KKR plans to deploy a major chunk from its record Asia fund for buying troubled assets in the country
KKR co-founder Henry Kravis said
"Banks don't have management bandwidth whereas we do. So, we will create equity value by working with the company. That makes an attractive proposition for the banks as well," he said. "There are some very good companies and what is wrong with them is that their capital structure is impaired and we can help them out."
Background
In May2016, the government has allowed foreign institutions to have 100% ownership in asset reconstruction companies to resolving mounting problems of bad debt. KKR had earlier planned to buy a minority stake in International AssetWhat is Asset Reconstruction Company?
An asset reconstruction company is in the business of acquiring Non-performing assets (NPAs).The Banks and an ARC get into an agreement in which the ARC take over the NPAs from the Banks Balance Sheet at a certain amount, lower than the Book Value. After this process, the particular ARC try to recover this amount from the borrowers. Read More
Expected Questions
Which of the following companies has become first foreign foreign investor to fully own an Asset Reconstruction Company (ARC) in India?
a. KRK
b. KRM
c. KKR
d. KRM
