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Home Debt Purchasing India ICICI’s Kingfisher Airlines debt sold to Srei arm

ICICI’s Kingfisher Airlines debt sold to Srei arm

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Srei Venture Capital (SVCL), the fund management arm of Kolkata-based Srei Infrastructure Finance has purchased entire Rs 430-crore debt exposure of ICICI Bank in Kingfisher Airlines (KFA).
 
The loan sale has taken place three days ahead of a meeting of lenders to discuss the future course on KFA.  

India Global Competitive fund of SVCL has bought the exposure, therefore, the loan would not be in the books of Srei Infrastructure Finance. 
 
Kingfisher Airlines' loan was a standard asset on ICICI Bank's books, which means that the airline continued to service its repayment obligations to the bank. However, the loan was restructured once, which means that the bank had revised the repayment terms after the cash strapped airline faced difficulties in meeting its contracted obligation. 
 
The loan has been sold by ICICI along with the collateral that comprised shares of UB group's liquor company, sales of which will help Srei generate steady revenue from the asset.
 
The public sector banks (PSBS) hold the bulk of the airline's Rs 7,000-crore debt.  However, they do not have enough collateral as security to recover their loans in case they chose to sell the airline's assets. Since PSBs do not hold any substantial securities, it seems unlikely for them to find financial investors like Srei without selling at distressed prices. 

 

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