UPDATE 4: 8:13 p.m. ET 9/13/2022: JC Flowers Asset Reconstruction is in initial talks with Deutsche Bank, Barclays and other foreign banks and non-bank finance companies to raise around INR 10 billion ($125.8 million) to fund the acquisition of Yes Bank’s INR 480 billion non-performing loans (NPLs) at INR 111.83 billion, according to two sources with knowledge.
The ARC has to pay INR 16.775 billion to the lender within 60 days from being declared as the successful bidder, the sources said.
The loan portfolio will be sold under a 15:85 structure, wherein 15% of the total consideration will be paid upfront and the remainder would be in the form of security receipts, as
reported.
Yes Bank is expected to finalize the sale of its stressed loan portfolio to JCF ARC LLC and JC Flowers Asset Reconstruction Pvt. Ltd. this week, as reported. The bank did not receive any counter bids in the Swiss challenge auction as the consortium of Asset Reconstruction Company India Ltd. (ARCIL) and Cerberus Capital Management did not submit a binding bid, as further reported.
JC Flowers ARC, Deutsche Bank, and Barclays did not respond to requests for comment.
– Dipika Lalwani
UPDATE 3: Yes Bank to Finalise Sale of INR 480B NPLs to JC Flowers ARC This Week; No Counter Bids Received in Swiss Challenge AuctionUPDATE 3: 8:09 p.m. ET 9/13/2022: Yes Bank is expected to finalize the sale of its stressed loan portfolio aggregating to up to INR 480 billion ($6.038 billion) to JCF ARC LLC and JC Flowers Asset Reconstruction Pvt. Ltd. at INR 111.83 billion this week, according to two sources familiar with the matter.
The bank did not receive any counter bids in the Swiss challenge auction as the consortium of Asset Reconstruction Company India Ltd. (ARCIL) and Cerberus Capital Management did not submit a binding bid, the sources added.
The tentative due date for submission of the challenger bid is Aug. 29, and the successful bidder under the Swiss challenge method will be declared by the first week of September, as reported.
Prashant Kumar, CEO of Yes Bank, at a press conference on July 18 said that if the Swiss challenge is won by JC Flowers ARC, the initial stake of the bank in partnership with JC Flowers Asset Reconstruction would be 9.99%, as per the regulatory compliance, with a condition to increase the stake up to 20%, as previously reported.
Yes Bank, ARCIL and Cerberus did not respond to requests for comment.
UPDATE 2: ARCIL, Cerberus Capital Management Submit EoIs for Yes Bank Swiss Auction of INR 480B Loan PortfolioUPDATE 2: 5:13 a.m. ET 7/26/2022: Asset Reconstruction Company India Ltd.’s (ARCIL) and Cerberus Capital Management in partnership with ARCION Revitalization Pvt. Ltd. have submitted expressions of interest (EoIs) for Yes Bank’s Swiss auction of its INR 480 billion ($6 billion) stressed loan portfolio, according to two sources familiar with the matter.
As
reported, Yes Bank had set a base bid at INR 111 billion which was received from JCF ARC LLC and JC Flowers Asset Reconstruction Pvt. Ltd.
According to a
process note dated July 17 circulated by Yes Bank, the last date to submit the EoIs was July 23 and the last day for submission of earnest money and for the bank to declare qualified bidders is July 30.
According to the process note, EoI participants are required to deposit INR 1.750 billion as earnest money in favor of the bank.
The tentative due date for submission of the challenger bid is Aug. 29, and the successful bidder under the Swiss challenge method will be declared by the first week of September, the process note adds.
UPDATE 1: JC Flowers Asset Reconstruction’s INR 111B Bid for Yes Bank INR 480B NPLs Set as Base Bet; July 23 Deadline to Submit EoIsUPDATE 1: 6:47 a.m. ET 7/18/2022: Prashant Kumar, CEO of Yes Bank, at a press conference today, July 18, attended by Reorg, said that the bank has set a base bid at INR 111 billion ($1.390) which was received from JCF ARC LLC and JC Flowers Asset Reconstruction Pvt. Ltd. to sell a stressed loan portfolio of the bank aggregating to up to INR 480 billion via a Swiss challenge auction.
According to an auction notice
published in
Economic Times on July 16, investors can obtain the process note required for submission of expression of interest (EoI) by July 21 and the last date for submitting the EoIs is July 23.
According to the auction notice, Yes Bank has invited bids from asset reconstruction companies (ARCs), with or without a partnership with any financial institution. The notice adds that Ernst & Young has been appointed as the transaction advisor.
As per the notice, the eligibility criteria of the EoI participant is below:
- Minimum assets under management and funds deployed both at a global level together with partner foreign investors of $5 billion in the immediately preceding completed financial year based on the latest available audited financial statements or other applicable filings;
- Demonstrated funds availability of at least $250 million for investment in India, to the satisfaction of the bank.
Kumar added that the loan portfolio will be sold under a 15:85 structure, wherein 15% of the total consideration will be paid upfront and the remainder would be in the form of security receipts.
Kumar further stated at the press conference that if the Swiss challenge is won by JC Flowers Asset Reconstruction, the initial stake of the bank in partnership with JC Flowers Asset Reconstruction would be 9.99%, as per the regulatory compliance, with a condition to increase the stake up to 20%.
The bank has provided 81% provisions for the stressed loan portfolio, Yes Bank’s management said during the press conference. As of March 31, 2022, the bank’s gross non-performing asset (GNPA) ratio stood at ~14%, after the sale of the loan portfolio, the GNPA ratio is expected to be ~ 2% - 3%, according to the bank’s management.
Original Story 3:43 a.m. UTC on July 15, 2022Yes Bank to Conduct Swiss Challenge Auction With JC Flower ARC Bid Setting Base Price for INR 480B Stressed Loan PortfolioRelevant Document:Announcement
Yes Bank Ltd. announced to the BSE Ltd. today, July 15, that it will conduct a Swiss challenge auction based on bids received from JCF ARC LLC and JC Flowers Asset Reconstruction Pvt. Ltd. to sell stressed loan portfolio of the bank aggregating to up to INR 480 billion ($6 billion).
The bank has decided that JC Flowers ARC will be the base bidder for a proposed sale of an identified stressed loan portfolio, the announcement states.
The bank’s board on May 6 signed a binding term sheet with JCF ARC and JC Flowers ARC for strategic partnership in relation to sale of identified stressed loans of the bank, the announcement shows. The term sheet became effective on July 15 after pre-conditions were met, according to the announcement.