Yes Bank relooks at its assets sale plans

This comes even as the private lender continues discussions with American distressed assets investors JC Flowers & Co. and Cerberus Capital.

The bank’s management is deliberating on transferring the loans to NARCL as it looks to clean its books before fresh fundraising through a rights issue or a qualified institutional placement (QIP), the people cited above said on the condition of anonymity.

Yes Bank has already missed its deadline to complete the asset sale by 31 March.

“The bank management is unhappy with the bids it has received from the two funds and has asked them to reconsider it," said one of the two people cited above.

Mint had reported in January that Cerberus Capital had put the higher bid of close to ₹12,000 crore for the assets, a large chunk of which has been declared fraud, where the chances of recovery are slim.

“However, the bank has done a fresh assessment that it can on its own recover amounts to the tune of ₹5,000 crore and, therefore, is in a dilemma where to include these assets in the transaction," said the second person cited above.

Responding to a query from Mint, a spokesperson for Yes Bank denied any plan to cancel the asset sale, which is being conducted via the Swiss challenge method wherein other interested parties will also be invited to bid for the assets and match the highest offer.

The sale of assets will take place as per the 15:85 structure, wherein 15% of the transaction value will be paid upfront, and the remainder will be in the form of security receipts to be redeemed, depending on recovery by the asset reconstruction company.

Last year, the central bank had given its in-principle approval to Yes Bank for setting up an ARC business, provided it is a minority investor, and there is an arms’ length distance between the seller and buyer.

However, Mint reported on 13 January that the bank wants the right to appoint the chairman and key managers across departments of the proposed asset reconstruction company in which it will hold only a 20% stake.

A successful sale of bad loans is crucial for the revival of Yes Bank, which has been looking to raise funds from external investors to shore up its balance sheet.

The bank’s board recently approved fundraising of ₹10,000 crore through a mix of debt and equity.

The Economic Times reported on 3 March that private equity giant Carlyle is considering a ₹3,750–4,500 crore investment in Yes Bank, along with peer Advent International.

The report said that Yes Bank is in talks with the private equity investors to raise ₹7,500-11,250 crore worth of growth capital to bolster its balance sheet two years after the regulator put it under the stewardship of the State Bank of India to stave off a possible run on deposits.