The State Bank of India (SBI), mortgage lender HDFC and Toronto-based Brookfield are coming together to set up an asset reconstruction company (ARC) in India that will be focused on real estate.

While Brookfield will hold 60% stake in the venture, SBI and HDFC each will own 20%. This will, however, be subject to regulatory approvals.

"It will be a real estate-focused ARC. SBI and HDFC will be minority partners with 20% stake each. The remaining 60% will be with Brookfield, SBI chairman Rajnish Kumar told Indianbankingnews.com in an interview.

The consortium is planning to invest up to $1 billion as initial equity.

Kumar said that the distressed real estate sector offers a lot of opportunity for acquisition of assets. With valuations down, this is the best time to invest in stressed assets.

Last year, Brookfield acquired US-based Oaktree Capital, a specialist in distressed assets.