• Pair sign memorandum of understanding for India joint venture
  • Canada’s Brookfield would manage recapitalized businesses.

Brookfield Asset Management Inc., Canada’s largest alternative asset manager, signed a memorandum of understanding with State Bank of India to set up a joint venture to invest in stressed assets in India.

Brookfield would put about 70 billion rupees ($1 billion) into the venture, the pair said an e-mailed statement on Wednesday. SBI would contribute as much as five percent of total investment, the statement said, without being more specific. Other lenders could later be involved.

Brookfield would manage the recapitalized businesses.

Ridding banks’ balance sheets of bad loans may help to revive credit growth and further Prime Minister Narendra Modi’s goal of creating jobs. Stressed assets, which include bad debt and restructured loans, rose to 11.5 percent of total loans as of March 31, central bank data show.

SBI shares gained 0.9 percent to 231.65 rupees at 12:56 p.m. in Mumbai, extending this year’s gains to 3.3 percent. BSE Bankex, a gauge of 10 banking shares, has gained 12 percent this year.

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