Hedge fund Valiant Capital Partners is raising up to US$900 million to invest in distressed assets in India.
Valiant JM India Opportunities Fund LP is seeking to benefit from an expected revival in the Indian economy after a new business-friendly government came into power in May, the Wall Street Journal reported Tuesday.
The fund is raising US$500 million with an option to increase it up to US$750 million. Valiant’s Indian partner, JM Financial Ltd., could invest an additional US$150 million.
The first round of funding is expected to close Jan. 1 but the fund will be open for subscription until March, the report said, citing unnamed sources.
Valiant Capital was founded by Christopher Hansen, an alumni of Julian Robertson ’s Tiger Management Corp. that has widespread investments in Indian companies.
JM Financial rebuilds bad assets through its JM Financial Asset Reconstruction unit.
Selling of bad assets and loans is expected to surge next year as India’s central bank is tightening the screws on local banks, mostly state-run, to call in dubious loans.
The banking system is dominated by public-sector institutions that account for three-fourths of India’s total lending and close to 90 percent of its bad and stressed loans, according to Reserve Bank of India data in January.
Slowing economic growth and rising interest rates have left many Indian companies unable to service interest payments or repay debt.
Despite that, Indian banks have been lenient in extending credit or restructuring loans on favorable terms to borrowers to avoid writing off the debt.
With an expected revival in the economy on the horizon, restructuring firms expect to be able to squeeze payments out of Indian entrepreneurs and companies. Banks, especially state-run lenders, were largely reluctant to go through this process owing to tedious legal wrangles and for fear of reprisals from politically connected business groups.
Stressed assets, a broader measure of troubled loans that include restructured loans at commercial banks, reached 10 percent of the total, according to the central bank.
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