Another one bites the dust in the housing finance sector, and this time it’s one of the largest foreign-owned non-banking financial company (NBFC) by networth in India - Altico Capital.
Another one bites the dust in the housing finance sector, and this time it’s one of the largest foreign-owned non-banking financial company (NBFC) by networth in India - Altico Capital.
The company handles more than Rs 4,000 crore of outstanding loans and has recently defaulted on its interest payments worth Rs 20 crore to Mashreq Bank of Dubai on Rs 340 crore of external commercial borrowing (ECB).
Altico Capital in its regulatory filing said, “Our failure to repay the amounts set out above may result in an acceleration of interest repayment/redemption obligations in respect of non-convertible debt securities issued by us and may trigger a default in their timely repayments.”
The real estate lender manages a loan book worth of Rs 6,900 crore as on June 2019. The company focuses on senior secured lending to mid-income residential projects and commercial real estate sector across tier-1 cities in India. The key shareholders in the company are Clearwater Capital Partners, Abu Dhabi Investment Council and Varde Partners.
On September 3, India Ratings and Research downgraded company’s rating to ‘A+’ from ‘AA-‘ and changed the outlook to negative.

The rating agency said, “The revision takes into account the continued pressure on the real estate sector, which has resulted in a weakened operating environment for the construction lending business, the stretched working capital cycle for real estate borrowers, which has led to volatile delinquencies, tighter funding, which has resulted in wider spreads and diluted on-balance sheet liquidity buffers. While the company is diversifying its portfolio both in terms of sectors and ticket size, it is likely to be reflected in the performance only gradually.”
It also added that the loan book has exposure to realty developers, many of whom have weak and stretched credit profiles. In terms of lifecycle, 31 percent of Altico’s loan book was attributable to early-stage funding of projects as of July 2019, and about 70 percent of the loan book was under moratorium as of June 2019.
Altico’s loan book is concentrated, given high single-party exposures. The top ten individual exposures accounted for 39 percent of the loan book (90 percent of the net worth) and the top 10 group exposures accounted for 60 percent of the loan book (139 percent of net worth) at end-FY19. With this high concentration, the impact could be disproportionate in the event of any major defaults, the report added.
As per Altico’s annual report of FY18, the company’s bank loans are to the tune of Rs 23.48 billion (Rs 2,348 crore), and in the last 15 months, the borrowing from the bank have doubled. Here’s a list of banks and NBFCs exposure to Altico:
With so much borrowings in Altico’s books, we learn three important lessons from this troubled financier:
First Published: Sept 13, 2019 4:49 PM IST
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