Avenue Capital Group, a New York-based investment firm with $9.4 billion in assets under management, is set to foray into the Indian distressed assets market by picking up a majority stake in Asset Reconstruction Co India Ltd (Arcil).

Avenue would be infusing over Rs 1,500 crore in Arcil to acquire a large stake, multiple sources familiar with the deal told CNBC-TV18.

"Arcil has made an application to the RBI involving a transfer of shares from existing shareholders to Avenue Capital Group. Post transaction, Avenue Capital Group will be the largest shareholder of Arcil," Arcil CEO Vinayak Bahuguna told CNCB-TV18.

"Avenue Capital will support our growth plans and help Arcil engage to bring in more capital," said Bahuguna.

Arcil expect the deal to close in the first quarter of 2019 and Avenue Capital Group will hold 27 percent stake in Arcil post the transaction, said the company.

Avenue Capital will buyout stakes from IDFC Bank, Ashmore Capital, FirstRand, Barclays and Karur Vyasa Bank while SBI, IDBI Bank, Punjab National Bank and ICICI Bank will maintain their current stakes in Arcil.

State Bank of India is the largest shareholder in Arcil with close to 20 percent stake followed by Punjab National Bank, IDBI Bank, ICICI Bank.

As per ARCIL’s website, the company bought non-performing assets worth over Rs 78,000 crore from financial institutions, banks, NBFCs, among others.

Avenue, led by billionaire CEO Marc Lasry, is best known for its bets on distressed debt. With the potential transaction, Avenue will join the list of global financial firms looking to tap the growing opportunities in the Indian distressed assets space.

US-based Blackstone has acquired a majority stake in International Asset Reconstruction Co earlier this year while World Bank’s arm IFC also bought a stake in Encore Asset Reconstruction Co. Global firm KKR & Co has started its own ARC and Bain Capital has tied up with the Piramal Group for distressed assets buyout.

( The story has been updated with Arcil CEO's comments.)

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First Published:Nov 12, 2018 10:18 AM IST