Brookfield, SBI said to mull India stressed asset venture

Singapore/Mumbai/Toronto: Brookfield Asset Management Inc. is in talks with State Bank of India, the country’s largest lender, about forming a joint venture to invest in stressed Indian assets, people with knowledge of the matter said.

Brookfield, Canada’s largest alternative asset manager, has discussed investing about Rs.70 billion in the venture while SBI and its associate banks are willing to invest as much as Rs.20 billion, according to the people. The companies haven’t agreed on terms, and talks could still fall apart, the people said, asking not to be identified as the information is private.

About 2% of loans at State Bank, which accounts for one fifth of all credit in India, are at risk of souring even after a central bank audit prompted lenders to set aside higher provisions for bad loans. About Rs.313 billion of the bank’s loans are under stress and two-thirds could sour, SBI chairman Arundhati Bhattacharya said last month.

The proposed joint venture may invest equity in stalled projects in industries including infrastructure, according to the people. Brookfield and SBI are still discussing the potential joint venture structure and the nature of the investments it would pursue, the people said.

State Bank of India