YES BANK concludes assignment of ~ INR 48,000 crore stressed asset loan portfolio to JC Flowers ARC. YES BANK is pleased to announce the completion of the assignment of its non-performing assets totalling ~ INR 48,000 Crores of principal outstanding (adjusted for recoveries since then,) as on March 31, 2022 to J.C. Flowers Asset Reconstruction Private Limited (JC Flowers ARC). This is by far the single largest transaction of sale of non-performing assets in the Indian Banking System.
YES BANK is confident that JC Flowers ARC will enable unlocking the true potential value of the assets being assigned under the sale transaction. Further, this transaction allows the Bank to benefit from the recoveries in excess of the current considerations.
Mr. Prashant Kumar, Managing Director & Chief Executive Officer, YES BANK, said, “The transfer of the Bank’s stressed assets marks the single largest non-performing asset sale ever in the India Banking System. Coupled with the recent capital raise, this is yet another strategic milestone in the Turnaround Journey of YES BANK. This transaction would further strengthen our balance sheet, allowing the Bank to focus fully on growth and profitability as future strategic objectives. I further believe that the JC Flowers ARC platform will serve as a model and will allow other Indian financial institutions to tap and monetize considerable interest of global investors in the distressed credit markets.”
As part of a competitive process conducted by the Bank, JC Flowers ARC had submitted a binding bid of INR 11,183 Crores, under a 15:85 structure (15% cash and 85% security receipts) for assignment of pool of identified stressed assets of the Bank, for position, as on March 31, 2022. Thereafter, the Bank, towards the objective of value maximization, conducted a transparent bidding process basis the Swiss Challenge method, under the aegis of the Master Direction – Reserve Bank of India (Transfer of Loan Exposures) Directions, 2021 dated September 24, 2021, with the bid submitted by JC Flowers ARC being designated as the ‘Base Bid’. Pursuant to this, the Board of Directors of the Bank, at their meeting held on September 20, 2022, approved the declaration of JC Flowers ARC as the winner of the Swiss Challenge process.
YES BANK had appointed Ernst & Young (EY) as its exclusive transaction and process advisor, and Cyril Amarchand Mangaldas as its legal advisor to assist the Bank through this process.
Recently, the Bank also concluded the second largest private capital raise transaction to have taken place in the Indian Banking Sector over the last two decades. The Bank’s Board of Directors approved the allotment of equity shares and equity share warrants aggregating to a total consideration of ~ INR 8,887 crore (~US$1.1bn) through a preferential issue to the funds affiliated with two global marquee private equity investors – Carlyle and Advent International. Subsequent to this issuance, both investors now own 9.99% each of the post-issue paid up share capital of the Bank.
Both the above transactions will provide the Bank the necessary impetus to further accelerate its objective of growth and profitability.