Private equity firm Lone Star has joined hands with IL&FS to invest in struggling Indian infrastructure projects. The tie-up will have an investment corpus of $550 million, which could result in asset purchases of up to $2.5 billion, according to the partners.
The country’s banks have been saddled with more than $130 billion of non-performing assets, mostly from sectors such as steel and power, hurting new credit and economic growth. Resolving soured loans is one of the main targets for the government and the Reserve Bank of India.
The Lone Star-IL&FS collaboration seeks to “assist banks, sponsors and asset reconstruction companies recycle capital, thus permitting reinvestment capital in fresh projects,” the companies said in a statement.