ARCIL Files Draft Papers for IPO with Sebi

Avenue Capital Group-backed Asset Reconstruction Company (India) Ltd (ARCIL) has taken a significant step towards its initial public offering (IPO) by filing draft red herring prospectus (DRHP) with the Securities and Exchange Board of India (Sebi). This move marks a pivotal moment for the company as it prepares to enter the public market.

IPO Structure and Shareholder Movements

The IPO will consist entirely of an offer for sale (OFS) of up to 10.54 crore equity shares by existing promoters and shareholders, with ARCIL not receiving any proceeds from the public issue. Notably, New York-based Avenue Capital plans to offload up to 6.87 crore shares, while State Bank of India and Federal Bank Ltd will sell 1.94 crore and 10.35 lakh shares, respectively. In a significant exit, Singapore’s sovereign fund GIC will sell its entire 5% stake, amounting to 1.62 crore shares.

ARCIL's Market Position and Financial Health

As the first asset reconstruction company in India, ARCIL has established a strong presence in the debt resolution space. A CRISIL report highlights its profitability, with a standalone profit of Rs 305.34 crore in FY24, and its significant assets under management (AUM) of Rs 15,230 crore. With a net worth of Rs 2,462.5 crore as of March 31, 2024, ARCIL stands as a formidable player among private ARCs.

Future Prospects and Competition

ARCIL's strategic acquisitions and recovery efforts have positioned it well against competitors like Edelweiss ARC and Phoenix ARC. The company's upcoming IPO, managed by IIFL Capital Services, IDBI Capital Markets & Securities, and JM Financial, is eagerly anticipated by investors looking to capitalize on India's growing financial sector.