Aditya Birla forms $1 billion JV with US-based investment firm Varde to buy stressed assets in India

Varde Partners Inc. and Aditya Birla Capital Ltd. are creating a joint venture to invest as much as $1 billion in distressed assets in India, according to people familiar with the transaction, who asked not to be identified because the information is private. The U.S. investment firm and Indian financial services provider, helmed by billionaire Kumar Mangalam Birla, are expected to deploy this sum over three years, one of the people said. The venture, which will scout for deals of up to $100 million, may be announced as early as this week, the person said.

Varde, which manages $14 billion of assets, joins overseas investors from Blackstone Group LP to Oaktree Capital Group LLC drawn by India’s efforts to resolve $210 billion in soured loans. The scramble among local lenders to sell assets intensified after the central bank last year forced about 40 large defaulters into bankruptcy courts and then set stringent deadlines for stressed accounts to be restructured or share the same fate.

An Aditya Birla group spokeswoman declined to comment. A spokeswoman for Varde in London didn’t immediately respond to emailed queries.

Varde’s Co-Chief Investment Officer Ilfryn Carstairs called the India distressed opportunity “ enormous” and one of the biggest in the world, in a September 2017 interview. Carstairs said that he saw “systemic” opportunities in India, adding that its soured loans problems were comparable to Italy and Spain.

Aditya Birla Capital already has an asset reconstruction business focusing on bad loans to micro, small and medium firms. It may also set up an Alternative Investment Fund to buy financially-stressed firms that may be on the brink but haven’t defaulted, one of the people familiar said.