Yes Bank to transfer stressed assets worth ₹48,000 cr to JC Flowers by November-end

Private lender Yes bank is planning to transfer stressed assets worth ₹48,000 crore to asset restructuring company JC Flowers by the end of November this year, says Prashant Kumar, the chief executive officer and managing director of Yes Bank. Kumar was speaking at FIBAC 2022, which is a banking event organised by the Federation of Indian Chambers of Commerce and Industry (FICCI) and Indian Banks’ Association (IBA). The bank’s non-performing assets (NPAs) currently stand at 12.89%.

Following the development, shares of Yes Bank surged as much as 5.21% to hit an intra-day high of ₹16.30. 

In July this year, the private lender selected JC Flowers for the sale of its stressed loans after a consortium of Cerberus Capital and Asset Reconstruction Company of India (ARCIL) withdrew from the bid. YES Bank used the Swiss Challenge method to complete the bidding. Under the Swiss Challenge method, the highest bid placed in the first round of auction becomes the base price for other bidders before the second round of auction. JC Flowers will be paying ₹11,183 crore for the stressed assets. The asset reconstruction company will have to pay ₹1,677 crore within 60 days after the private lender formally approves the offer. 

The private lender, which recently came out of the Reserve Bank of India’s (RBI’s) reconstruction scheme, has signed a binding term sheet with JC Flowers ARC. The company said in a statement, “Pursuant to the enabling approval of the Board of Directors on May 06, 2022 and the final approval from the Board Credit Committee on July 13, 2022, the Bank has signed a binding term sheet with JCF ARC LLC and JC Flowers Asset Reconstruction Private Limited ("JC Flowers ARC") for strategic partnership in relation to the sale of identified stressed loans of the Bank.”

Meanwhile, in the July-September quarter this year, the private lender reported a decline in net profit by 32.2% to ₹152.8 crore on a year-on-year (YoY) basis, as compared to ₹225.50 crore in the same period last year.

Moreover, in August, the private lender announced that it is planning to raise ₹8,900 crore from private equity investors Carlyle Group and Advent International, with each investor potentially acquiring up to 10% stake in Yes Bank. The bank will raise the funds through a combination of about $640 million in shares and about $475 million in share warrants. If the bank successfully completes the fundraising programme, this would be one of the largest private capital garnered by an Indian private sector bank. 

Through the fundraising, the bank proposes to issue 3.70 crore equity shares on a preferential basis at a price of ₹13.78 per share and 275 crore warrants convertible into equity shares at a price of ₹14.82 per warrant, adding ₹8,900 to the equity capital base of the bank.