YES Bank Ltd has received two EoI (expressions of interest) for buying its block of stressed assets worth ₹48,000 crore, MD & CEO Prashant Kumar told BusinessLine.
Without naming the two entities, Kumar said both of them were from the set of 13 bidders that had participated in the initial bidding process to acquire the bank’s stressed assets.
The two entities that have shown interest in the assets are reported to be ARCION Asset Reconstruction Company, and Asset Reconstruction Company of India Ltd (ARCIL). ARCION ARC is in the process of being acquired by Cerberus Capital Management — one of the initial bidders for the assets.
As per the Swiss Challenge auction, if either of the two entities bids higher than JC Flowers ARC, the latter will have the option to match the bid. If any other ARC wins the Swiss challenge, the entire portfolio will go to that entity. This might also disrupt the lender’s plan of investing in an ARC as the winning entity will decide if they want the lender as a partner.
If JC Flowers is selected as the ARC post the Swiss Challenge, YES Bank plans to invest up to ₹350 crore for a 20 per cent stake in the asset reconstruction joint venture. Kumar had then said the entire process for completion of the Swiss Challenge and transfer of the stressed assets will take about 60-75 days.
On Saturday, while discussing the bank’s Q1FY23 results, Kumar said the bank has entered into a binding term sheet with JC Flowers ARC which has submitted a ₹11,183-crore bid for the stressed assets. This was accepted as the base bid for the Swiss Challenge process.
The interested entities will now begin the due diligence process by “around the first week of August” following which they will submit the financial bids, he said today.
“By the end of August, we would be in a position to declare the final winner,” Kumar added.
The proposed asset sale will help clean-up the private lender’s asset quality, bringing down its gross NPA ratio to below 2 per cent from 13.4 per cent as of June, YES Bank had guided earlier.