Home / Industry / Banking /  Why Yes Bank is seeking a Rs12,000 crore investment in its ARC

Yes Bank Ltd, which is in the process of selecting a partner for an asset reconstruction company (ARC) to warehouse a large portion of its bad loans, is seeking as much as 12,000 crore from potential investors, two people directly aware of the ongoing negotiations said.

The private sector lender, which plans to transfer non-performing assets (NPAs) of close to 54,000 crore to the ARC by the end of the current fiscal, is seeking bids anywhere between 10,000 and 12,000 crore, the people said, requesting anonymity. The bank has sought binding bids by 25 January from private equity investors.

The private sector lender also wants the right to appoint the chairman and key managers across departments of the proposed ARC in which it will hold a 20% stake, they said.

“According to initial estimates, at least a few dozen Yes Bank employees will move to the ARC. These are employees who have been managing the accounts for a long time. The bank feels that they will be needed to ensure continuity and recovery," one of the two people cited above said.

On 18 October, Mint reported that US-based distressed assets investor Cerberus Capital was among contenders to partner Yes Bank for the ARC, along with London-based hedge fund Emso Asset Management Ltd, which has a tie-up with Eight Capital in India, and Oaktree Capital. “Global private equity fund J.C. Flowers has also emerged as a serious contender," said the second person cited above. “Investors are studying the conditions, but the bank is hopeful of getting several binding bids by the end of the deadline," said the second person.

Spokespeople for Cerberus Capital and Eight Capital declined to comment, while queries sent to JC Flowers and Yes Bank remained unanswered till press time.

In August, Yes Bank invited expressions of interest to set up the ARC and hired EY as the process adviser. The bank had stipulated that an investor should have at least $5 billion worth of assets under management and funds deployed globally. Mint reported on 2 September that the private lender received expressions of interest from a dozen investors for setting up an asset reconstruction company in which it will remain a minority partner.

Initial bidders included Brookfield Asset Management, Ares SSG, Oaktree Capital Management, JC Flower, Varde Partners, CarVal Investors, Avenue Asia Group, Bain Capital’s India Resurgent Fund, Apollo Global Management, Rohatyn Group and Silver Point Capital.

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