Yes Bank on Friday informed that its the board of directors have signed a binding term sheet with JCF ARC LLC and JC Flowers Asset Reconstruction Private Limited (JC Flowers ARC) for strategic partnership in relation to sale of identified stressed loans of the bank.
Accordingly, the Bank has decided that the JC Flowers ARC will be base bidder for a proposed sale of an identified stressed loan portfolio of the Bank aggregating to up to ₹48,000 crore, it added.
“Further to above and having subsequently fulfilled the requisite pre-conditions, the said term sheet has now become effective as on July 15, 2022,” the lender stated in the release, adding that “In accordance with the guidelines issued by the Reserve Bank of India, the Bank proposes to run a transparent bidding process on Swiss Challenge basis for sale of such portfolio using the JC Flowers ARC’s bid as the base bid.”
In August last year, Yes Bank invited expressions of interest to set up the ARC, in which it proposed to own a 20% stake. The Reserve Bank of India (RBI) had earlier rejected Yes Bank’s application to start an ARC, citing a conflict of interest. Following this, the bank tweaked the structure of the proposed ARC, offering to hold a minority stake and find more shareholders to overcome the regulatory hurdle.
JC Flowers has a presence in India with its JC Flowers ARC, a joint venture (JV) with Indian distressed investor Eight Capital and London-based Emso Asset Management. In June, Mint had reported that Yes Bank Ltd has chosen JC Flowers Asset Reconstruction Co. as its joint venture partner to offload ₹49,000 crore of bad loans as the private lender seeks to clean up its books and raise capital to fund credit growth.
Shares of Yes Bank were trading nearly a per cent lower at ₹13 apiece on the BSE. The bank stock is down about 6% in 2022 (YTD) as compared to a 9% fall in benchmark Sensex.
In March 2020, the Reserve Bank of India (RBI) had announced a reconstructing scheme for the revival of then troubled private lender Yes Bank.
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