NARCL completes acquisition of SREI Infra Finance & Equipment Finance
National Asset Reconstruction Company (NARCL) on 8th December 2023 signed documents for acquisition of the two SREI companies – SREI Equipment Finance and SREI Infrastructure Finance under the Insolvency and Bankruptcy Code, 2016 (IBC). In August, earlier this year, NARCL had emerged the winning bidder under the IBC process.
As a part of the resolution process NARCL has paid 50% of the committed resolution amount to the lending consortium.
Speaking on the resolution process, N Sundar MD & CEO NARCL said, “NARCL is extremely delighted to emerge as the successful resolution applicant (RA) under the IBC process for the two SREI companies. This would be one of largest time-bound resolutions in recent years. We are aiming to revive SREI’s equipment lending business and work with all stakeholders to derive optimum value for both the entities. Our endeavour would also be to maximize recovery for the lenders in a transparent and time-bound manner”.
He further emphasized, “NARCL’s commitment to revive the entities with the highest standards of corporate governance, transparency, integrity, and ethical practices will be paramount during this period of change. A robust business continuity plan will be put in place to ensure a seamless integration process, minimizing disruptions, and maximizing efficiency.”
The resolution plan has received approval from the National Company Law Tribunal (NCLT), the Reserve Bank of India, and the Competition Commission of India.
As per the resolution plan, NARCL had committed to an upfront cash of Rs 3,180 crores and a deferred payment of Rs 11,487 crore. The plan has a provision of offering financial creditors a 20% stake in SREI Infrastructure Finance Ltd. The fair value of the 20% stake has been estimated at Rs 200 crore.
About NARCL & IDRCL
National Asset Reconstruction Company Limited was incorporated for aggregation and resolution of Non-Performing Assets (NPAs) in the Banking Industry. With its first debt acquisition in January 2023, NARCL so far has aggregated debt of over Rs 25500 Crore covering 6 assets.
It has made significant strides in the stressed assets market in India and aims to work with stakeholders towards addressing stressed assets in the banking system.
Public Sector Banks own a majority stake in NARCL, with the balance held by private banks. Canara Bank is the sponsor bank. NARCL aims at addressing legacy stressed assets over Rs 500 crore in the banking system. It is registered with the Reserve Bank of India as an Asset Reconstruction Company under Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.
NARCL has an exclusive arrangement with IDRCL, wherein IDRCL provides services for the optimal resolution outcome for the assets aggregated by NARCL.
Also See: A lowdown on NARCL’s resolution plan for SREI Infrastructure Finance
