PwC close to executing first NPA acquisition

Professional services firm PricewaterhouseCoopers is close to arranging the first acquisition of a non-performing asset in India.

"PwC is currently advising on what looks to be the first NPL (non-performing loan) acquisition in India," says the latest issue of NPL Asia, a PwC journal, which will soon be circulated among the firm's clients.

Speaking to Business Standard, Ashwani Puri, executive director, PwC, who leads the corporate finance and recovery practice of the firm in India, said, "We feel that we are very close to conclude the deal, though in such cases you cannot be sure of the timeframe."

Refusing to disclose further details, Puri said that the deal is following the participative model wherein the seller of the NPA gets a part of the profit the buyer subsequently makes.

"In such a model, the value of the asset is not so contentious," he added. Puri also said that the sale of NPAs in India should fetch a better price than in China where assets are sold 10 cents to a dollar, as the Chinese assets on the block are older than the Indian assets.

However, he added that the prices in India would not be as good as in Taiwan where NPAs have been sold at up to 40 cents to a dollar.

"Many of the loans in Taiwan have real estate as collateral, whereas in India you have more of industrial loans," Puri said.

The latest issue of NPL Asia dwells at length on Taiwan emerging as the hottest NPA market in Asia.

In the last five months, the journal says, Taiwanese banks have held seven auctions disposing off approximately $2.6 billion of NPAs, with an eighth auction under way. It claims that PwC is the top advisor in the Taiwanese NPA market.

"The situation in India is quite similar to that in Taiwan as both the countries are overbanked (too many banks in the country) and percentage of NPAs to the total assets of banks and financial institutions is more or less the same," Puri added.

PwC is working with a couple of financial institutions, a few banks and some state finance corporations on how to maximise the returns on NPAs.