ARC, backed by DMI Finance, to launch first distressed asset fund of $ 27 million

The non-bank lender, backed by DMI Finance, Alchemist Asset Reconstruction Company (ARC) Pvt Ltd is planning to launch its first Alternative Investment Fund (AIF) to raise around 200 crore rupees (around $ 27.4 million) in two series, a senior executive told VCCircle.

“The group of sponsors of Alchemist ARC, ie the Dhir family, is in the process of launching an alternative investment fund called Abacus AIF totaling Rs 200 crore ($ 13.7 million) in two rounds . Series 1 and Series 2 of 100 rupees each, ”said Manish Nihalani, COO of ARC.

The fund targets active investments in distressed assets in micro, small and medium enterprises (MSMEs) and also assesses the retail segment. “We see opportunities in the renewable energy sector, manufacturing, consumer products and pharmaceuticals, but we are open to investment in all sectors,” said Nihalani.

The debt accumulator has previously applied to the market regulator Securities and Exchange Board of India (Sebi) for the registration and approval process, led by Srishti Dhir, chairman of Alchemist ARC.

Sponsor shareholder Alok Dhir, director of non-executive sponsor at Alchemist ARC, which owned over 27% of ARC in March 2020, will anchor the fund to invest Rs 20 crore and by next calendar year he plans get more investor commitments.

“We aim to get the approvals by December and can start the financing part in the next quarter or the first quarter of next year,” Nihalani said.

There have been a few transactions that appear in the pharmaceutical industry where promoters could not monetize due to lack of funds, they could not scale to match the supply-demand cycle, he added.

So far, ARC has acquired an outstanding debt of around Rs 7,500 crore, which has been acquired at around Rs 2,200 crore. He made a total of recoveries of around Rs 700 crore, of which Rs 161 crore was in FY21 alone.

“We have grown really well over the past five years. This year, we are targeting the acquisition of NPA (non-performing assets) of more than Rs 300 crore. Our team identified a few assets and last month we made an offer for two assets worth Rs 100 crore each. We are also looking at large stressed loans, ”added Nihalani.

The New Delhi-based ARC became operational in 2007, but only became active in recent years. It is backed by the non-bank finance company (NBFC) DMI Finance, which has investors such as the Burman Family Office of Dabur India promoters and the Liechtenstein-based asset management company New Investment Solutions (NIS).

DMI Finance was founded in 2008 by Shivashish Chatterjee and Yuvraj C Singh, former executives of Citigroup, and has been in the real estate finance business for over a decade.

In 2013, DMI Finance acquired around 16% of the capital of Alchemist ARC, which was reduced to around 12% of the capital at the end of March 2020. The same year, the Burmese took a strategic stake in DMI Finance for an undisclosed amount. . Four years later, DMI Finance announced the launch of a distressed asset vehicle.

It also operates an alternative investment arm DMI Alternatives Pvt Ltd, which invests in real estate companies. In June 2018, VCCircle announced that DMI’s alternative investment arm had raised Rs 1,600 crore for its real estate-focused fund.

Alchemist ARC, which holds distressed debt on its books, facilitates the acquisition of distressed companies within and outside bankruptcy.

In June of this year, a consortium led by DMI Alternative Investment Fund, managed by DMI Alternatives, received approval from the National Company Law Tribunal (NCLT) to acquire the debt-ridden Pawan Impex Pvt Ltd, which is part of the company. commercial real estate and rental Prius Commercial. Projects Pvt Ltd.

In 2017, the subsidiary of Abhijeet Group, Abhijeet MADC Nagpur Energy Pvt. Ltd has been admitted into insolvency proceedings by Alchemist ARC, which also holds its debt of over Rs 1,370 crore (approximately $ 178 million).

A few years ago, the ARC acquired a debt of around Rs 270 crore from Magnum Ventures, a publicly traded paper company that owns a five-star 216-room hotel located in Ghaziabad, Uttar Pradesh. It is operated by the Radisson Hotel group under its Country Inn & Suites brand. The hotel was restructured and efficient before the pandemic and will again require restructuring.

In addition, he also holds debts in two other hotel assets, a sugar unit, textiles and steel companies among the significant debt acquisitions.

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