Top Distressed Funds Mull Buying State Bank Of India’s Bad Loans

Multiple global and local distressed asset investors are reportedly evaluating the purchase of certain non-performing loans from the State Bank of India (SBI), which were put up for sale in the current financial year starting in April, as per sources familiar with the situation.

India’s primary state lender recently disclosed a list of 331 non-performing assets with a collective outstanding value of Rs 960 billion (USD 11.6 billion). This information was conveyed to potential investors in a note, seen by a media outlet.

Among the interested investors are well-known names like Cerberus Capital Management LP from New York, SC Lowy based in Hong Kong, and Asset Reconstruction Company (India) Ltd., supported by Avenue Capital Group LLC. Additionally, local contenders include Phoenix ARC Pvt., backed by billionaire Uday Kotak, JM Financial Asset Reconstruction Co., and Reliance Asset Reconstruction Co., according to anonymous sources who are familiar with the matter. However, no official comments have been provided by SBI, ARCIl, JM Financial, Cerberus, SC Lowy, Reliance ARC, or Phoenix in response to queries from a media house.

Identifying non-performing loans has become a more systematic practice among Indian financial institutions following a report released by the nation’s central bank two years ago. This report aimed to enhance the transparency and efficiency of buying and selling distressed assets. After overcoming a shadow banking crisis in 2018 that had a significant impact on the country’s capital markets, India’s banking sector is now in a more resilient state.

Reportedly, discussions have revolved around approximately 48 distressed assets from SBI, with investors showing preference for those with higher outstanding values. In the previous financial year, SBI had offered around 150 distressed assets valued at a total of Rs 350 billion, as per sources with direct knowledge of the matter.