Yes Bank to partner JC Flowers ARC to sell Rs 48k-crore bad loans

Private lender on Friday said it has signed a term sheet with JC Flowers Asset Reconstruction Co as its JV partner for sale of bad loans worth Rs 48,000 crore. Yes Bank will contribute equity to the ARC, which will initially deal with Yes BankRs s soured assets before expanding its ambit.

“The bank has signed a binding term sheet with JC ARC LLC and JC Flowers Asset Reconstruction Private Ltd for strategic partnership in relation to sale of identified stressed loans of the bank,” Yes Bank said in a regulatory filing.

ET had first reported on May 20 that Yes Bank has picked JC Flowers ARC as its JV partner.

Yes Bank said it has decided that the JC Flowers ARC will be the base bidder for a proposed sale of an identified stressed loan portfolio aggregating up to Rs 48,000 crore.

The bank said the term-sheet between the two is effective July 15. As per the RBI guidelines, Yes Bank is proposing to run a transparent bidding process on Swiss Challenge basis for sale of such portfolio using the JC Flowers ARCRs s bid as the base bid.

“Setting up of an ARC is not only to resolve our NPAs, we see this as a large business opportunity,” Prashant Kumar, MD, Yes Bank, had told ET in an interview in May this year. “We have a very large stressed asset book; resolving this within the bank would take a long period of time. Optically, when any investor is looking at a bank which has 14% GNPA as compared to a bank which doesnRs t have this issue, the valuations look different. The other aspect is, a lot of management bandwidth is going into recoveries, which should be focused on growing the bank.”