 "Ujjivan Small Finance Bank calls for counterbids on Arcil's anchor offer")
Bengaluru-based Ujjivan Small Finance Bank (SFB) has called for counterbids to sell its ₹364.5 crore stressed micro banking portfolio loans through a Swiss challenge auction, triggered by an anchor bid of ₹34.26 crore from Avenue Capital and State Bank of India (SBI)-backed Asset Reconstruction Company (India) Ltd (Arcil), according to multiple sources aware of the development.
The anchor bid for the exposure translates into a haircut of around 90 per cent for the lender.
The portfolio put up for sale by the bank comprises 119,478 accounts. The bank has called for counterbids on a cash plus security receipts basis by February 26, with a markup of 5 per cent over the anchor bid.
If there are no counterbids, Arcil will be the successful bidder. However, if counterbids are received, Arcil will be given the opportunity to match the highest counterbid.
The stressed micro banking asset put up for sale by the bank involves ₹294.5 crore loan pool, which were 150 days past due (DPD), and ₹70 crore of these loans that have been written off by the bank.
Industrywide stress in the microfinance sector has built up because of unchecked credit growth and the issuance of multiple loans to customers, which has resulted in significant overleveraging among borrowers.
Major banks and microfinance-focused non-banking financial companies (NBFCs) are witnessing a significant rise in delinquencies within this segment.
IndusInd Bank had sought bids from ARCs to offload ₹1,573 crore of non-performing microfinance retail loans from over a million accounts. The bank had invited bids on a 100 per cent cash basis from entities interested in acquiring these assets, and set a reserve price of ₹85 crore, which would translate into a recovery of 5.04 per cent for the bank. Utkarsh SFB was also looking to offload around ₹355 crore of microfinance loans and had set a reserve price of ₹52 crore.
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