YES Bank NPA sale challenge: Arcil-Cerberus backs out of the race

Asset Reconstruction Company (India) Ltd (Arcil) & Cerberus Capital, which was planning to challenge JC Flower’s Rs 11,183-crore bid for YES Bank non-performing asset (NPA) portfolio under Swiss Challenge method, has decided not to submit bids, sources aware of the development said. This could pave the way for JC Flower to buy the private lender’s bad loans.

The NPA sale of Rs 48,000 crore was key for the bank to clean up the books of YES Bank and would reduce its gross non-performing loans significantly. The bank’s gross NPA, as a percentage of gross advances, was 13.4 per cent as on June 30. Of the Rs 11,183 crore, YES Bank will get 15 per cent as cash for the NPA sale, while 85 per cent will be by way of security receipts.

A Swiss Challenge auction was launched with JC Flower’s base bid of Rs 11,183 crore, which is roughly 135 per cent of carrying value on the balance sheet as of March 31, the bank had said earlier. The deal is set to be the largest sale of stressed assets in domestic markets.

In July, YES Bank signed a binding term sheet with JCF ARC LLC and JC Flowers ARC for a strategic partnership for the sale of identified stressed loans of the bank.