Yes Bank Stressed Assets: Cerberus-Arcil Consortium Pulls Out of Race
Yes Bank will now proceed with selling the stressed book to JC Flowers ARC.
A consortium of Cerberus Capital Management and Asset Reconstruction Company of India Ltd. have decided to withdraw from the race for Yes Bank Ltd.'s Rs 48,000-crore stressed accounts.
The Cerberus-Arcil consortium failed to submit a bid earlier this week in the swiss challenge auction for the bad loans, which now stands concluded, according to two people in the know. In the absence of any formal bid, Yes Bank will proceed with selling the book to JC Flowers Asset Reconstruction Co., which was earlier identified as a base bidder.
JC Flowers ARC had submitted a bid worth Rs 11,183 crore for the stressed assets, Yes Bank had disclosed.
The swiss challenge auction allowed competing bidders to outbid JC Flowers. Once the competing bidders submitted a higher bid, JC Flowers would have the right of first refusal under the process.
BQ Prime had reported last month that a consortium of Cerberus and Arcil were seriously considering a bid. Now with the decks cleared for the sale to JC Flowers ARC, the pricing of the transaction is likely to remain unchanged, the people quoted above confirmed.
Queries emailed to Yes Bank, Cerberus Capital and Arcil on Friday morning remained unanswered.
The Economic Times newspaper first reported on Friday that Cerberus-Arcil had withdrawn from the process.
Once the sale of the stressed assets is concluded, Yes Bank's gross NPA ratio will drop to around 2%, Chief Executive Officer Prashant Kumar had previously said.
As on June 30, Yes Bank's capital adequacy ratio stood at 17.7%, which included a Common Equity Tier-1 capital ratio of 11.9%. The bank reported a net profit of Rs 311 crore during the first quarter, with a gross non-performing asset ratio of 13.4%.
The sale of bad loans is a key part of Yes Bank's turnaround story, after the private lender was placed under a reconstruction plan in March 2020 by the Reserve Bank of India. Yes Bank has said that it has exited the reconstruction plan, with its financial position having improved significantly since then.
Yes Bank is currently in the midst of a equity fundraising process, where it will mop up around $1.1 billion from Carlyle Group and Advent International by issuing shares and warrants. Investors will get 10% stake each in the private sector lender as part of this transaction.
In an interview with BQ Prime, Kumar had said that the equity fundraise is likely to be a re-rating event for Yes Bank.