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IL&FS fiasco: KKR seeks to buy assets from stressed Indian shadow lenders

George Smith Alexander & Anto Antony | Bloomberg/ 12 Oct 18 | 09:34 PM

IL&FS

KKR & Co. is seeking to acquire assets from stressed Indian shadow lenders, as it tries to take advantage of the market disruption after a rare money market default by Infrastructure Leasing & Financial Services Ltd.

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The private equity firm’s two Indian credit units may spend as much as 20 billion rupees ($270 million) combined to purchase portfolios from local non-banking finance companies, Sanjay Nayar, KKR’s India chief executive officer, said in an phone interview Friday.


“We believe current market conditions offer attractive opportunities to buy portfolios of structured credit and real estate credit," Nayar said.


KKR is also seeking outright acquisitions of Indian non-bank lenders and their employee teams, people with knowledge of the matter said. It’s looking for targets that could help diversify its lending in areas including small and medium enterprises, according to the people, who asked not to be identified because the information is private.


The buyout firm follows State Bank of India, the country’s largest bank, which last week tripled its target for asset purchases from such shadow lenders. India’s central bank warned earlier this month of stricter regulations in the offing to ward off default risks rising from the so-called asset liability mismatch.


KKR is one of the few foreign private equity firms that has its own non-banking finance operations in India. It has invested around $2.5 billion in the country this year, including about $920 million spent in private equity transactions, the people with knowledge of the matter said.


A representative for KKR declined to comment.


Both of the buyout firm’s finance companies in the country -- KKR India Financial Services Pvt and KKR India Asset Finance Pvt -- currently have no short-term borrowings, Nayar said. In addition, Abu Dhabi Investment Authority made a significant minority investment in KKR India Financial Services in December.


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