Edelweiss gets nod to set up ARC

MUMBAI: The Edelweiss group has received approval from RBI to set up an asset reconstruction company (ARC). Edelweiss will hold 49% stake in the ARC, while the balance 51% will be held by high networth individuals (HNI).

The company will initially have a capital base of Rs 2 crore, which will subsequently be raised to Rs 100 crore. Sources, on condition of anonymity, said the company may launch distress asset fund and is in preliminary discussion with some investors. The majority stake in the ARC will be owned by Edelweiss Alternate Asset Advisors (EAAA). The new company will be called Edelweiss Asset Reconstruction Company. In fact, the company had even identified its top brass for running the business.

The company had hired Siby Antony, former executive director of IDBI Bank, and also the trustee executive of Stressed Assets Stabilisation Fund. He was also overlooking the operations of corporate debt restructuring group as chairman of empowered group.

Among other ARCs in the industry, Kotak-promoted ARC, known as Phonix ARC, also has a similar ownership pattern where wholly-owned subsidiaries of Kotak Bank hold 49% while the balance 51% is owned by HNIs.

Sources said that both Kotak and Edelweiss may give HNI an exit option in future by either listing the shares on the stock exchange or offering it to banks or foreign investors.

At present, the ARC promoted by State Bank of India, ICICI Bank and IDBI Bank, known as Arcil, is most active, followed by Phonix ARC, Asset Reconstruction Company (IARC) and JM Financial Asset Reconstruction Company. Other ARCs registered with the RBI include Peguese, Dhir and Dhir, UTI promoted Asrec, IFCI promoted ACE and ADAG���s Reliance promoted ARC.