Yes Bank set to go virtually NPA-free with big deal to offload bad loans

by 5paisa Research Team Last Updated: Dec 10, 2022 - 06:25 am 22.6k Views
Listen icon

Private-sector lender Yes Bank has inked a binding agreement to offload a large block of stressed loans to JC Flowers Asset Reconstruction Pvt. Ltd that would make it virtually non-performing assets (NPA)-free.

The deal will enable Yes Bank to become a more attractive value proposition for prospective private equity investors who have been eyeing a stake in the company.

SBI currently owns a 30% stake and is the single largest shareholder in Yes Bank.

Yes Bank had faced headwinds two years ago over corporate governance concerns related to co-founder and former chief Rana Kapoor leading to his exit and the entry of state-controlled lender SBI to steer the company.

The bank’s gross NPA level had shot up to 15.4% as of March 31, 2021, which moderated to 13.9% as of March 31, 2022. But was still way above the comfort level and average of other private lenders.

The private-sector lender had previously offered to create a new ARC for bidding for its own stressed assets, only to be shown a red signal from the Reserve Bank of India. It is now likely to pick up a 20% stake in the JC Flowers ARC.

JC Flowers ARC is currently a three-way JV between JC Flowers, Emso and Eight Capital. Eight Capital is looking to exit the venture by selling its 35% stake in the ARC. Part of this would be bought by Yes Bank.

The lates move to sell the bad loans follows an enabling approval of the board of directors on May 6 and the final approval from the board credit committee on July 13, the bank said Friday.

Accordingly, the bank has decided that JC Flowers ARC will be base bidder for a proposed sale of an identified stressed loan portfolio of aggregating to up to Rs 48,000 crore ($6 billion).

The bank said it plans to run a bidding process on the Swiss Challenge basis for the sale of such portfolio using JC Flowers ARC’s bid as the base offer.

This means while new bidders would be allowed to bid on top of the base price, JC Flowers will have the right to match the higher bid.

JC Flowers had offered around Rs 12,000 crore to buy the bad loans, pipping other suitors like Cerberus.

Share Market Today

How do you rate this article?

Start Investing in 5 mins*

Rs. 20 Flat Per Order | 0% Brokerage


About the Author

Our research team is composed of some highly qualified research professionals, their expertise range across sectors.

Enjoy 0%* Brokerage with 5paisa
Resend OTP
Please Enter OTP
Mobile No. belongs to

By proceeding, you agree to the T&C.

Latest News
Polymatech Electronics: ₹1,500 Crore IPO for Semiconductor Expansion

Polymatech Electronics, prominent semiconductor chip manufacturer based in Chennai, is gearing up for significant financial move with plans to launch₹1,500 cr initial public offering (IPO) by end of year. This IPO, double size initially envisaged, signifies company’s ambitious expansion strategy in semiconductor industry.

Vodafone Idea Sets Floor and Cap Prices for FPO Amid Market Speculation

In a major development, Vodafone Idea Ltd. has revealed the floor price and cap price, alongside the lot size, for its upcoming follow-on public offering (FPO). The telecom giant witnessed a decrease of more than 3.25% during early trading on Wednesday, settling at ₹12.51, thus holding a market capitalization exceeding ₹61,000 crore.

Bondada Engineering Share Price Surged by 1423.2%, Know Why?

Bondada Engineering, standout in integrated infrastructure sector, witnessed extraordinary surge in its share price, soaring by impressive 1423.2% since its debut on BSE SME platform in August 2023. Investors who were part of IPO allocation saw significant gains, potentially earning 18.3 lakhs in just over eight months.