India’s distressed asset market is going to witness a significant development. Asset Reconstruction Company (India) (ARCIL), the country’s first asset reconstruction company and a key player in resolving stressed loans for over two decades, has filed it’s Draft Red Herring Prospectus (DRHP) with the Securities and Exchange Board of India (SEBI).
Book-running lead managers IIFL Capital, IDBI Capital, and JM Financial are going to steer the listing process, with MUFG Intime India as registrar.
The listing, expected later this fiscal, will give public investors a rare opportunity to invest in a pure-play on India’s bad debt resolution business. This sector is gaining renewed attention amid rising stress in retail and SME loans.
Asset Reconstruction Company (India): Company Overview
Incorporated in 2002, ARCIL was the first company in India to receive RBI’s registration under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act).
The company has been instrumental in shaping the ARC industry, starting with its first stressed asset acquisition in December 2003. Today, it operates across three verticals:
- Corporate Loans – Resolution of large-ticket corporate NPAs.
- SME and Other Loans – Mid-market and business loan segments.
- Retail Loans – Housing, vehicle, personal, and credit card debt.
ARCIL IPO Offer Structure
ARCIL IPO will be a pure Offer for Sale (OFS) — meaning no fresh capital is being raised by the company. Instead, existing shareholders are monetising part of their holdings.
| Selling Shareholder | Shares Offered (in Crore) |
|---|---|
| Avenue India Resurgence Pte. | 6.87 |
| State Bank of India | 1.95 |
| Lathe Investment Pte. | 1.62 |
| The Federal Bank | 0.10 |
| Total | 10.55 |
Promoter Avenue India Resurgence — backed by Avenue Capital Group — currently holds 69.73% of ARCIL, while SBI holds 19.95%.
Financial Performance Snapshot
| Particulars | FY23 | FY24 | FY25 |
|---|---|---|---|
| Revenue from Operations | 809.2 | 605.8 | 581.8 |
| Profit After Tax (PAT) | 286.6 | 330.5 | 329.5 |
| PAT Margin (%) | 35.27 | 54.22 | 54.21 |
| Return on Avg. Equity (%) | 13.43 | 14.15 | 12.95 |
| Debt-to-Equity (x) | 0.05 | 0.06 | 0.11 |
| AUM | 16,223.5 | 15,230.0 | 16,852.6 |
| Cumulative SR Redemption Ratio (%) | 45.42 | 51.31 | 51.79 |
AUM Mix — Moving Beyond Corporate Loans
While corporate NPAs still dominate ARCIL’s portfolio, retail and SME loans are emerging as faster-growing segments.
| Segment | FY23 | FY24 | FY25 | FY25 Share (%) |
|---|---|---|---|---|
| Corporate Loans | 13,416.5 | 11,956.4 | 12,720.0 | 75.48% |
| SME & Other Loans | 1,247.9 | 1,331.3 | 1,384.7 | 8.22% |
| Retail Loans | 1,559.1 | 1,942.3 | 2,747.9 | 16.31% |
| Total AUM | 16,223.5 | 15,230.0 | 16,852.6 | 100% |
The pivot toward retail is strategic — CRISIL estimates that stressed retail assets in India’s banking and NBFC sector have risen from INR 3.47 lakh crore in FY20 to INR 6.92 trillion in FY25. ARCIL’s retail AUM has grown at a CAGR of 20.79% in the last two years.
Competitive Position & Industry Standing
According to CRISIL:
- 2nd Largest ARC in India by AUM.
- 2nd Most Profitable ARC in FY24.
- 99.03% Capital Adequacy Ratio, the highest among large private ARCs.
- Low Debt — Debt-to-Equity ratio of 0.11x.
- High Recovery Efficiency — Cumulative SR redemption ratio of 51.79%.
Operational Network
ARCIL runs a lean but highly connected national network:
- 13 offices across 12 states.
- 193 employees.
- 201 registered valuers, 163 collection agents, and 950 empanelled lawyers.
Its resolution strategies include restructuring, settlements, enforcement of security interests, and acting as a resolution applicant under the Insolvency and Bankruptcy Code (IBC).
Why This IPO Matters for Investors
- Pure Play ARC Exposure – Rare listed opportunity to invest directly in India’s bad debt resolution market.
- Established Track Record – Over two decades of operations, strong recovery rates.
- High Profitability – Consistently strong margins and returns.
- Sector Tailwinds – Rising stressed retail debt and regulatory push for ARC-led resolutions.
- Capital-Light Model – Low leverage and high capital adequacy provide resilience.
Risks to Watch
- Regulatory Changes – ARC operations are tightly regulated by RBI, changes could impact business models.
- Recovery Cyclicality – Revenues linked to the timing and magnitude of recoveries.
- Competition – Increasing participation from newer ARCs and banks’ in-house resolution teams.
- Economic Slowdowns – Could both increase opportunities (more NPAs) but delay recoveries.
The Road Ahead
With India’s bad loan market projected to remain active — especially in the retail and SME space — ARCIL’s expertise and established infrastructure position it to capture meaningful opportunities.
ARCIL IPO will also serve as a market litmus test for investor appetite toward ARC business models, which are still underrepresented in the listed space.
For more details related to IPO GMP, SEBI IPO Approval, and Live Subscription stay tuned to IPO Central.