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September 12, 2022

J.C. Flowers likely to buy Yes Bank’s stressed assets worth $6bn

Indian lender Yes Bank is reportedly set to take a final call on the sale of its stressed assets worth $6bn (INR480bn) at its credit committee meeting on 15 September.    

The bank is expected to approve private equity firm J.C. Flowers as the distressed loan portfolio buyer, according to media  reports.

The development follows the withdrawal of bids by a competing consortium led by private equity firm Cerberus and Asset Reconstruction Company of India (ARCIL).

The consortium had submitted an expression of interest in this regard earlier this year.

The bids were scheduled to be submitted by 7 September. 

J.C. Flowers had submitted a bid of INR111.83bn for the stressed loan portfolio.

“We evaluated the loan accounts carefully and realised that there were so many fraud-hit and other problematic accounts that recovery would have been a challenge,” reported Reuters citing a source with direct knowledge.

“Once the board approves the J.C. Flowers bid, it will take about a month for the paperwork to be completed and the assets to be transferred,” said another source.

Yes Bank , in a recent statement, said the transfer of the bad loans to a new asset reconstruction company may bring down its gross bad loans to 2% from 13.4% reported in June quarter this year.

Further, the bank has provisioned for nearly 80% of the total loan value.

In March 2020, the Government of India approved the draft reconstruction plan for Yes Bank.

The draft scheme was proposed by the Reserve Bank of India (RBI ) after placing the cash-starved bank under moratorium. In August this year, Yes Bank secured $1.1bn by selling a 10% stake to Carlyle Group and Advent International . The capital helped the bank’s stock jump by over 40% since 30 June.

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