Mumbai: The race to find a rescuer for a struggling Indian shadow bank at the center of an industry crisis has narrowed.
Altico Capital India Ltd. is one of the latest caught up in the nation’s shadow banking crisis that started in 2018, and had been courting suitors. One of them, Kotak Investment Advisors Ltd., won’t make a binding bid for Altico by a Jan. 15 deadline, people familiar with the matter said.
In India, non-bank financiers play a crucial role in funding everything from condominium construction to purchases of personal goods like cars and phones. Real-estate focused Altico’s restructuring and sale process comes as the broader shadow-bank crisis drags on, hurting the property sector and the economy.
The non-bank lender’s troubles have been piling up since it started defaulting in September. Cerberus Capital Management LP and SSG Capital Management are now the only remaining external bidders, highlighting dwindling interest in Mumbai-based Altico which is grappling with soaring bad loans.
Kotak halted work on a binding bid for Altico after getting adverse feedback from creditors, the people said, asking not to be identified because the information is private. Mumbai-based Kotak’s indicative offer hinged on a purchase of either part or all of Altico’s loan portfolio, one of the people said. A low cash infusion and a high fee structure caused the pushback, the second person said.
A Kotak spokesman didn’t respond to a request for comment, while an Altico spokesman declined to comment.
Cerberus Capital and SSG Capital are now competing with an Altico shareholder-sponsored group to take over the shadow lender after two other firms pulled out. Creditors will meet Wednesday to discuss how the winning bidder will be decided, one of the people said.
A SSG Capital spokesman declined to comment, while Cerberus didn’t immediately reply to an email sent outside of U.S. office hours seeking comment.
Disclaimer: Uday Kotak is an investor in ThePrint
News media is in a crisis & only you can fix it
You are reading this because you value good, intelligent and objective journalism. We thank you for your time and your trust.
You also know that the news media is facing an unprecedented crisis. It is likely that you are also hearing of the brutal layoffs and pay-cuts hitting the industry. There are many reasons why the media’s economics is broken. But a big one is that good people are not yet paying enough for good journalism.
We have a newsroom filled with talented young reporters. We also have the country’s most robust editing and fact-checking team, finest news photographers and video professionals. We are building India’s most ambitious and energetic news platform. And we aren’t even three yet.
At ThePrint, we invest in quality journalists. We pay them fairly and on time even in this difficult period. As you may have noticed, we do not flinch from spending whatever it takes to make sure our reporters reach where the story is. Our stellar coronavirus coverage is a good example. You can check some of it here.
This comes with a sizable cost. For us to continue bringing quality journalism, we need readers like you to pay for it. Because the advertising market is broken too.
If you think we deserve your support, do join us in this endeavour to strengthen fair, free, courageous, and questioning journalism, please click on the link below. Your support will define our journalism, and ThePrint’s future. It will take just a few seconds of your time.