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Yes Bank to partner with JC Flowers in its ARC business
June 02, 2022
Yes Bank Ltd has chosen JC Flowers Asset Reconstruction Co. as its joint venture partner to offload ₹49,000 crore of bad loans as the private lender seeks to clean up its books and raise capital to fund credit growth.
JC Flowers has offered ₹12,107 crore against the bad loan book, guaranteeing a 25% recuperation, two individuals acquainted with the development said. Yes Bank had set Wednesday as the deadline for choosing its joint venture partner.
Cerberus Assets management, which came a nearby second, bid a comparable sum, however, JC Flowers enjoyed the benefit of already owning an asset reconstruction company (ARC) in India, individuals said in a state of secrecy.
“Cerberus would have required a half year to get RBI approval for acquiring another ARC, though JC Flowers previously had an existing ARC structure set up,” said one of the people cited above.
Yes Bank should put ₹400 crore in the JC Flowers ARC to get a 20% stake in the organization.
Payments by the joint venture organization for the bad loan book will be made under the 15:85 construction, with ₹1,800 crore, or 15% of the agreed amount, to be paid forthright in cash to Yes Bank. The rest will be paid in security receipts to be reclaimed as the ARC recovers money from defaulters.
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