India is no stranger to distressed debt investments. Players such as Citigroup and ADM Capital have been involved in several transactions in recent months. But the WL Ross deal marks the first time that a distressed debt player has acquired management control of an Indian company.
OCM India has a plant in PunjabÆs Amritsar with a capacity to produce around nine million metres of suiting fabric each year. Its OCM brand was at one time considered one of the leading men's suiting brands in India. But the company has recently fallen on hard times.
The auction of OCM was handled by the Asset Reconstruction Company of India (ARCIL) and generated interest from potential strategic buyers such as Arvind Mills, S Kumars and Raymond, which are all textile companies. It also attracted interest from distressed debt players.
OCM India was once a division of the listed SK Birla Group company, Birla VXL. The unit was carved out via a scheme of arrangement in March with a view to selling OCM and restructuring the loss-making Birla VXL. Lenders transferred their exposures in Birla VXL to ARCIL and ARCIL subsequently became a majority shareholder of OCM India. The company has remained under Birla management in the interim.
OCM India is the second SK Birla group asset to be sold by ARCIL. In June last year, ARCIL concluded an auction for soda-ash manufacturer, Saurashtra Chemicals, awarding it to the consumer goods player, Nirma.
WL Ross & Co was created in 2000 by founder Wilbur Ross who has earned himself a reputation as a turnaround specialist. The company recently became part of the AMVESCAP group when Ross sold the firm for around $375 million.
At the time of the deal with AMVESCAP, WL Ross had $3.5 billion in assets while AMVESCAP had around $2.3 billion. Ross and his team continue to manage the private equity business at AMVESCAP. In interviews Wilbur Ross has said he is bullish on India and China and on the textiles, automotive parts and reinsurance industries.