Canada's Brookfied to invest Rs 7k cr in bad loans through SBI joint venture

MUMBAI: Canada’s largest alternative asset manager Brookfield Asset Management has committed Rs 7,000 crore to buy bad loans in India through a joint venture with the State Bank of India. The commitment is part of a joint venture agreement announced by SBI on Wednesday to collaborate on investments in stressed assets.

A statement issued by SBI said that the country’s largest bank has committed up to 5% of total investments into stressed assets. “The proposed JV will independently evaluate and invest in various stressed assets, and will rely upon Brookfield’s operational expertise to manage recapitalized businesses,” a joint statement said. The proposed JV may, at a later stage, seek participation from other lenders in the identified assets.

SBI Chairman, Ms. Arundhati Bhattacharya, expressed optimism that this approach of collaborating with global players will enable the banks in general and SBI, in particular, to find alternate solution for resolution of stressed assets. According to her this approach will be more acceptable to both the lenders and the borrowers in cases where the promoters are not able to infuse funds and lenders are reluctant to take additional exposure.

Anuj Ranjan, Head of Brookfield India, said, “We’re very excited about this partnership with the State Bank of India. This is a great opportunity for us to continue to invest in the long-term India story, and we’re pleased to be further expanding our private equity platform here.”

SBI's gross bad loans touched Rs 72,792 crore or 5.1% of their total loans. After making provisions of Rs 7,949 crore, its net non performing assets fell to 2.8%. The provision coverage ratio - the cushion that bank keep to protect against bad loans is 65.2%.

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