Mumbai: Public sector lenders Allahabad Bank and Andhra Bank are looking for merchant bankers to sell their stakes in ASREC (India) Ltd, an asset reconstruction company.

The banks require the assistance of merchant bankers to value the company and scout for potential buyers to sell their stake of 53.06% either in part or in full, according to a document seeking bids.

Allahabad Bank and Andhra Bank hold stakes of 27.04% and 26.02% in ASREC, respectively. The other shareholders in the asset reconstruction company are Bank of India (26.02%), Indian Bank (11.22%), Life Insurance Corporation of India (9.18%) and Deutsche Bank (0.51%).

“The successful bidder shall be empanelled for a period of one year or till completion of the disinvestment process, whichever is earlier, and shall be in a position to provide an end to end solution to the assignment and identify the right domestic or global investors through a process of competitive bidding or any other manner in which Allahabad Bank and Andhra Bank may disinvest its stake in ASREC," said the document.

The department of financial services, ministry of finance, has directed all the public sector banks to initiate steps to review non-core investments and take suitable decisions with regard to divestment of non-core activities, the bank said. Non-core assets are investments by banks not related to lending and borrowing. The lenders said they plan to empanel five to ten merchant bankers and the one who procures the best valuation for the bank’s stake shall be awarded the assignment to conclude the deal.

The merchant bankers will be required to identify and conduct meetings with the potential investors to ascertain the interest of potential investors, according to the document. It will have to facilitate communication and provide the potential buyer with all necessary information pertaining to financials, it said.

ASREC reported a net profit of 9.48 crore on revenues of 25.19 crore in FY18. During the year, the company acquired 74 non-performing assets (NPAs) with a book value (total dues) of 820.95 crore from four banks and one financial institution against 24 NPAs with book value (total dues) of 565.46 crore from nine banks on both cash and security receipts basis in the previous year.

On 28 March, Allahabad Bank placed a newspaper advertisement inviting bidders for its land parcel at Mumbai’s Pedder Road area. Spread across 1,241 sq. metres, the property has a base price of 166 crore. Mint reported on 2 April that the bank is selling several prime properties across the country, as part of its plans to raise funds by selling off non-core assets.

On 26 February, the Reserve Bank of India took Allahabad Bank off its prompt corrective action (PCA) framework list, allowing the bank to resume its lending activities.

This was after the government said it would inject 48,239 crore in 2018-19 into 12 public sector banks, including Allahabad Bank and Corporation Bank, to help them meet capital requirements and accelerate lending to boost growth.

It had said that Corporation Bank will get the highest capital infusion at 9,086 crore, followed by Allahabad Bank, which will get 6,896 crore.

Among the other lenders, Punjab National Bank will get 5,908 crore, Union Bank of India 4,112 crore, Andhra Bank 3,256 crore and Syndicate Bank 1,603 crore.