Mumbai: Centrum Group is exploring entry into new lines of business such as stressed assets and insurance, even as the group is looking to boost its existing lending businesses with a fund-raise of around Rs500 crore.
In an interview, Jaspal Bindra, executive chairman of Centrum Group, said that the group is trying its hand at the bad loan resolution opportunity, although these are very early days and the group is yet to form a concrete strategy for the same.
“We are trying to understand the process and the mechanism and see how that works. We are not feeling rushed about not being there yet. We think that this business is going to be there for 20 years. There is a very large backlog and there will be natural accretion as well,” said Bindra.
In the interim, the group is experimenting with one or two smaller transactions, he said, to get a touch and feel of the business.
“I foresee that at some point we will be in the ARC (asset reconstruction company) business, but what sizes we do, what kind of sectors we do, those are things that we are trying to figure out. It is a very big market, a one-time bonanza where you could get a 50% or more haircut from banks. The underlying assets in most cases are running, performing assets. It is a once-in-a-lifetime opportunity of this size and scale, anywhere in the world,” said Bindra
Centrum’s ARC foray is most likely to focus on the mid-market space, he added. One of the bad loan resolution cases that the group is working on is that of transmission and telecom tower maker Jyoti Structures Ltd.
“We have underwritten the commitment to the lending group and we will now work on how to restructure it, how to rerun it,” said Bindra.
Centrum is also keen on other areas in the financial services space such as insurance.
The group today houses two distinct business lines—that of fee-based businesses such as merchant banking, wealth management and broking and lending businesses such as SME finance, microfinance and affordable housing finance.
“Insurance is an area that we are very keen to explore further but we are far from making any commitment. We do have an insurance broking business. We are doing a lot of internal homework to understand which segment would make more sense for us, what kind of capital investment will be needed and what could be the expected returns,” said Bindra. Meanwhile, the group is also looking to raise capital to the tune of Rs500 crore to fund the growth of its lending businesses.
“The investments are largely going to be in the lending businesses; that’s where the capital is required the most. We expect to close fiscal 2018 with a loan book of Rs1,000 crore,” said Bindra.
He added that the group has received interest from private equity funds as well as strategic investors for the fund-raise.
“We are looking at public markets, we have a lot of interest from private equity. There is also some interest from strategic investors, so we are keeping all options open. We could also do an IPO of our forex business. Forex is our most mature business and there is already a price discovery there as we did a round of private equity in that business,” he said.
Any capital market fund-raise by Centrum Capital Ltd or an IPO in the forex business will be in the second half of 2018, he added.