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Foreign Interest on the Rise for India Distressed Debt: SC Lowy

2018-04-27 07:34:21.787 GMT

By Lianting Tu and Anurag Joshi (Bloomberg) — “Massive  interest” from local and global funds began in the third quarter last year after India’s RBI asked lenders to initiate legal proceedings under the insolvency law against the nation’s 12 largest company defaulters in June,according to Jamie Tadelis, co-head of sales at SC Lowy in Hong Kong.

* “We have simply seen an increase in fund managers pivoting their efforts from other jurisdictions towards India,” Tadelis said in an emailed interview

** While local firms have set up stand-alone funds for buying India’s NPLs, most offshore asset managers have an allocation
available in existing multi-jurisdictional funds to invest in India

* Introduction of the insolvency law in 2016 has eased the process of resolving bad debts significantly because “the current code provides very clear, concise and definitive provisions,” he said

** “Prior to enactment, the typical resolution process took on average over 4 years and it was hit or miss as to whether or not an application would even be accepted by the courts”

** NOTE: The law includes a timeline for debt resolution of 180 days, which can be extendable by another 90 days

* “Appointment of an interim restructuring professional that reports to a creditor committee and assumes day-to-day control of a troubled corporate is a game changer,” Tadelis said

** Foreign investors are also becoming interested in local distressed assets due to a “shift from being held hostage by sponsors to taking control away from delinquent sponsors”

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