Yes Bank offloads stressed assets worth ₹48,000 cr to JC Flowers ARC

Yes Bank on Monday announced the completion of the assignment of its stressed assets loan portfolio to the tune of a whopping ₹48,000 crore to J.C. Flowers Asset Reconstruction (JC Flowers ARC). This is by far the single largest transaction of sale of non-performing assets in the country's banking system. With this transaction, Yes Bank is expected to benefit from the recoveries in excess of the current considerations.

In a statement, Yes Bank stated that the completion of the assignment of its non-performing assets totaling ~ ₹48,000 crore of principal outstanding (adjusted for recoveries since then,) as on March 31, 2022, to JC Flowers ARC.

It said that the bank is confident that JC Flowers ARC will enable unlocking the true potential value of the assets being assigned under the sale transaction.

Prashant Kumar, Managing Director & Chief Executive Officer, Yes Bank said, “The transfer of the Bank’s stressed assets marks the single largest non-performing asset sale ever in the India Banking System. Coupled with the recent capital raise, this is yet another strategic milestone in the Turnaround Journey of Yes Bank."

Kumar added, "This transaction would further strengthen our balance sheet, allowing the Bank to focus fully on growth and profitability as future strategic objectives."

Yes Bank's MD further believes that the JC Flowers ARC platform will serve as a model and will allow other Indian financial institutions to tap and monetize the considerable interest of global investors in the distressed credit markets.

According to the statement, as part of a competitive process conducted by the Bank, JC Flowers ARC had submitted a binding bid of ₹11,183 Crores, under a 15:85 structure (15% cash and 85% security receipts) for assignment of a pool of identified stressed assets of the Bank, for the position, as on March 31, 2022.

Later, with an objective for value maximization, Yes Bank conducted a transparent bidding process based on the Swiss Challenge method under the aegis of RBI's master direction on the transfer of loan exposures. The process was conducted with the bids submitted by JC Flowers being designated as the 'Base Bid'.

Thereafter, in a meeting held on September 20th, Yes Bank's board approved the declaration of JC Flowers ARC as the winner of the Swiss Challenge process.

Notably, Ernst & Young (EY) was appointed by Yes Bank as its exclusive transaction and process advisor, and Cyril Amarchand Mangaldas as its legal advisor for this process.

Also recently, Yes Bank completed the second largest private capital raise transaction to have taken place in the banking sector over the last two decades. Under this transaction, Yes Bank allotted equity shares and equity share warrants on a preferential basis to two global marquee private equity investors - Carlyle and Advent International for a consideration of ₹8,887 crore. Subsequently, Carlyle and Advent now own 9.99% each of the post-issue paid-up share capital of the bank.

These two transactions are expected to give Yes Bank the necessary impetus to further accelerate its objective of growth and profitability.

On Monday, Yes Bank shares closed at ₹21.40 apiece up by 0.94% on BSE. Its market cap was nearly ₹27,347 crore.