Tag: YES Bank. ARC

Five foreign investors shortlisted for majority stake in Yes Bank-backed ARC, BFSI News, ET BFSI

Banking & Finance

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Five foreign investors have made presentations to the Yes Bank management to form a new joint venture asset reconstruction company (ARC) which will house the lender’s non performing assets (NPAs), three people familiar with the development said.

The investors which have made presentations include Los Angeles based $149 billion Ares-SSG Capital, $15 billion alternative investment firm Varde Partners, US based $55 billion Ceberus Capital and distressed asset giants $156 billion Oaktree Capital and private equity company JC Flowers, three people familiar with the move said. Individual investors and Yes Bank could not be immediately reached.

Yes Bank will likely hold a minority share in the proposed ARC in line with Reserve Bank of India (RBI) directions. The selected investor is likely to hold a majority as much as 80% to 85% in the new venture, one of the persons said. EY is helping Yes Bank with the process.

“The model is more of a NARC type. Banks are not encouraged to hold a major share in any ARC. That’s why they are selling it,” said a second senior executive involved in the matter.

He was referring to the government backed National Asset Reconstruction Co (NARC) which has been formed to resolve legacy bad loans from the banking sector.

“Investors have not yet been officially informed about the short listed firms so the process will take some more before the partner is selected,” said a third person familiar with the matter.



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YES Bank scouts for investors to set up ARC

Banking & Finance

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Private sector lender YES Bank is moving ahead with plans to set up its own asset reconstruction company (ARC). It has floated an expression of interest (EoI) for potential investors to partner with it in the venture.

“The prospective investor will be the lead partner or sponsor of the ARC, with the bank as the other significant partner/sponsor, for conducting the business of asset reconstruction…,” YES Bank said in a newspaper advertisement.

According to the advertisement, the prospective investor or their sponsors should have minimum assets under management of $5 billion in the immediately preceding completed financial year.

It should also have demonstrated ability to commit funds for investment or deployment in Indian companies or Indian assets of about $0.5 billion.

Also Read: YES Bank, Indiabulls Housing Finance sign co-lending agreement

The potential investor should also have demonstrated global experience of dealing in stressed asset space and established track record of turn around and resolution of distressed assets and non performing loans in the part.

The proposed investor should also meet the “fit and proper” criteria of the Reserve Bank of India.

It has given time till August 31 to potential investors to submit EoIs.

Ernst and Young is the process advisor to YES Bank.

In a previous interview to BusinessLine, Prashant Kumar, Managing Director and CEO, YES Bank had said that the lender had applied to the RBI for setting up an ARC with a controlling stake.

“The RBI is not comfortable with giving a controlling stake to a bank as it would be a moral hazard. Since they have set up a committee to look at the ARC framework, we will wait for the report and then approach the RBI based on the proposal,” he had said in the interview in May this year.

For the quarter ended June 30, 2021, YES Bank reported a 355 per cent jump in its net profit to ₹206.84 crore. Gross NPAs were at 15.6 per cent of gross advances as on June 30, 2021 from 17.3 per cent a year ago.

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