Authum Investment and Infrastructure Ltd has secured the approval of the Reserve Bank of India (RBI) to acquire a 79.28% stake in India SME Asset Reconstruction Co. Ltd (ISARC), a SIDBI-sponsored asset reconstruction company (ARC), the company said in a statement today.
The ₹260 crore transaction, includes both primary and secondary deals, according to people familiar with the development.
This marks a significant expansion for the non-bank finance company (NBFC) as it deepens its presence in distressed asset management. The acquisition comes at a time when India’s ARC sector is undergoing a shake-up, with major global players exiting and banks increasingly favoring state-backed alternatives.
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Authum will acquire 56.52% of ISARC through a fresh issue of 13 crore shares and buy an additional 22.75% from existing shareholders. The NBFC will inject ₹170 crore through the fresh issue, boosting ISARC’s minimum net worth to ₹300 crore.
As of 31 March 2024, ISARC had a net worth of ₹129.68 crore and a turnover of ₹2.47 crore. With this deal, ISARC will become a subsidiary of Authum, which has also secured RBI’s approval to nominate two directors to ISARC’s board.
Mint in February 2024 reported about SIDBI’s plan to exit its ARC business. On 14 October 2024, Authum Investment informed the stock exchanges about its decision to enter into a shareholder agreement with ISARC.
The acquisition comes amid turbulence in the ARC industry.
Several players, including Blackstone-backed International Asset Reconstruction Co. and Aditya Birla Asset Reconstruction Co., have exited or wound down operations. Arcion Revitalization, originally promoted by Apollo Global and ICICI Bank, and Lonestar India have also exited the business.
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The sector has been squeezed by banks’ preference for selling bad loans to the National Asset Reconstruction Co. Ltd (NARCL), which offers a government-backed structure with 85% of payments in security receipts, reducing risk for lenders. In contrast, private ARCs must bid entirely in cash.
Authum, promoted by Alpana Sanjay Dangi, has been aggressively expanding. In 2022, it acquired Reliance Home Finance and Reliance Commercial Finance in an out-of-court resolution. Last year, it teamed up with Mahi Madhusudan Kela, wife of investor Madhusudan Kela, to buy a 42% stake in Prataap Snacks, known for its potato chips and masala sev.
The latest deal aligns with Authum’s strategy of expanding its footprint in financial services, even as some global firms retreat from India’s ARC sector.
