State Bank of India (SBI) has signed a Memorandum of Understanding with Brookfield Asset Management, Canada’s largest alternative asset manager, to invest in stressed assets in India.
Under the agreement, Brookfield will commit Rs7,000 crores ($1 billion; €912 million) while SBI will put up 5 percent of total investment into the joint venture.
“This approach of collaborating with global players will enable the banks in general and SBI, in particular, to find alternate solutions for the resolution of stressed assets,” said Arundhati Bhattacharya, chairman of SBI.
“Such an 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.”
The proposed JV will evaluate and invest in stressed assets independently and Brookfield will provide operational expertise to manage recapitalized businesses. Further rounds of fundraising are expected at a later stage of the collaboration.
“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,” added Anuj Ranjan, head of Brookfield India.
International players are looking to acquire bargain assets by seizing credit opportunities in India, which sits on $131 billion of problem loans. Earlier this year, Canada Pension Plan Investment Board (CPPIB), the investment manager of Canada Pension Plan, entered into a $525 million partnership with India’s Kotak Mahindra Group.
Brookfield is a Canadian global alternative asset manager with over $240 billion of assets under management. It specializes in real assets with a focus on property, renewable energy, infrastructure and private equity.