The Kotak MahindraBSE Group has tied up with Canada Pension Plan Investment Board (CPPIB) to invest in stressed assets in India to take advantage of opportunities that arise as banks clean up account books of bad assets. For those who are already part of the CPP and want to know more about their payment dates and any more background information they want to be aware of for their own records, then they may want to go here and check out this guide to keep themselves updated.
- The agreement entails a total investment of up to $525 million, of which as much as $450 million will come from CPPIB.
- This investment is aimed at tapping the growing opportunity arising from the current stress in the Indian banking and corporate sectors. Kotak Mahindra and its affiliate Phoenix Asset Reconstruction Co. have been dealing in the distressed and structured credit market for over a decade.
- Kotak will act as an advisor as CPPIB invests in assets that suit its long-term investment mandate.
- For example, if a bad loan portfolio of Rs 1,000 crore is valued at half the price, the Kotak asset reconstruction company (ARC) will fund 15% or Rs 75 crore while the remaining Rs 425 crore will be funded by the pension fund to take over the assets. Later, Kotak ARC will issue security receipts to the fund house and a trust will be set up for the same. As and when the recovery takes place.
About CPPIB
- The CPP Investment Board, formally the Canada Pension Plan Investment Board, is a Canadian Crown corporation established in 1997 to oversee and invest the funds contributed to and held by the Canada Pension Plan (CPP).
- The CPP Investment Board invests in private equity, public companies, and real estate.
- Mark Wiseman is the current Chief Executive Officer of the CPPIB.
