Yes Bank selects JC Flowers to acquire $6 bn bad loans
Yes Bank Ltd’s board has chosen JC Flowers Asset Reconstruction Co as the highest bidder to become the joint venture partner for sale of bank’s ₹48,000 crore (around $6 billion) bad loans.
With the final approval from the Board Credit Committee on July 13, 2022, the Bank said it 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 sale of identified stressed loans of the Bank”.
The term sheet will be effective as on July 15.
“Accordingly, the Bank has decided that the JC Flowers ARC will be base bidder for a proposed sale of an identified stressed loan portfolio of the Bank aggregating to up to ₹48,000 crore, the bank further said adding that it proposes to run a transparent bidding process on Swiss Challenge basis for sale of such portfolio using the JC Flowers ARC’s bid as the base bid.
JC Flowers has likely valued Yes Bank’s bad loan book of ₹48,000 crore at ₹12,107 crore, which will get transferred to the ARC.
The Swiss challenge auction process will start on Friday for potential buyers to up the offer... American private equity firm Cerebrus Capital, which was in the race to purchase Yes Bank’s bad loans, is expected to participate in the Swiss challenge, two people said on the condition of anonymity.
Under the Swiss challenge method, an entity makes an offer for an asset and the bid price is put as a benchmark to call for more proposals to make a higher offer. Once these are received, the original bidding entity is allowed to match the best bid. This typically takes place for buying/selling of nonperforming assets.