Private asset reconstruction companies (ARCs) are expected to see a 7-10% decline in assets under management (AUM) this fiscal due to reduced acquisitions, despite strong redemptions, according to Crisil Ratings. AUM is projected to fall to ₹1.2-1.25 lakh crore by fiscal 2025, down from ₹1.35 lakh crore.

The slowdown is driven by limited new opportunities in the corporate segment, with NPAs at a multi-year low, and moderate retail acquisitions. Competition from a new government-backed ARC and a preference for lower vintage NPAs also contribute to this trend.

In fiscal 2024, ARCs acquired more corporate debt, improving acquisition quality and reducing discount rates to 55% from 80% in FY23