Yes Bank Ltd. has partnered JC Flowers Asset Reconstruction Co. for sale of its stressed assets.
“…the bank has signed a binding term sheet with JCF ARC LLC and JC Flowers ARC for a strategic partnership in relation to sale of identified stressed loans of the bank,” the private lender said in an exchange filing.
Under this partnership, JC Flowers ARC has been identified as base bidder for a proposed sale of an identified stressed loan portfolio of the bank aggregating to up to Rs 48,000 crore.
This is the largest sale of stressed assets undertaken by any Indian bank.
Yes Bank will conduct a transparent bidding process under the Swiss Challenge method, as is required under Reserve Bank of India’s guidelines for such sales, it said. JC Flowers ARC’s bid will be considered the base bid for the auction.
On June 1, BQ Prime had reported that Yes Bank was close to signing a deal with JC Flowers & Co. for the sale of its stressed assets portfolio. The portfolio consists of the bank’s entire pool of gross non-performing assets, as well other stressed loans. JC Flowers ARC has put in a bid worth Rs 12,400 crore for these assets, ensuring a 25% recovery for the bank.
This week, BQ Prime reported that the RBI had given its in-principle nod for Yes Bank to purchase a 20% equity stake in JC Flowers ARC as part of this sale. A final approval for the equity stake will be required later.
As part of the deal, at least a portion of Yes Bank’s stressed asset management team will move to JC Flowers to resolve these assets.
The sale of these stressed assets is crucial for Yes Bank as it’s seeking to raise equity capital for its future growth plans. The RBI had initiated a reconstruction plan at the lender in March 2020 as its financial position worsened significantly.