Yes Bank to float Asset Reconstruction Company, invites bids from investors

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Yes Bank on Wednesday announced that it is seeking for a potential investor to be a part of the company as the lead investor with a strong financial capability, in setting up the asset reconstruction company (ARC). 

Potential investors, including foreign institutional investors, foreign portfolio investors, private equity, venture capital funds, domestic and foreign investment institutions, asset management companies, banks, and ARCs can take part in the Yes bank’s proposal.

The potential investor would be the lead partner/sponsor of the ARC, along with the bank as the other significant partner/sponsor. To become the lead partner/sponsor, the investor has to meet the ‘fit and proper criteria’: 

  • In the immediately preceding completed financial year, the investor must have at least $5 billion in assets under management (AUM) and funds deployed globally. They should also have proved the ability to commit $500 million in funds to invest in Indian firms or assets.
  • In addition to meeting the above criteria, the investors should also have global experience in the distressed asset space and a track record of resolving stressed assets as per the RBI’s guidelines. 

Ernst & Young, process advisor to Yes Bank for floating the ARC, invites expressions of interest (EOI) from interested investors. Interested investors should send their expressions of interest to [email protected] by August 31, 2021, at 5 p.m.

Further details on the development of the asset construction company were not shared by Prashant Kumar, MD & CEO of Yes Bank. Yes Bank has already stated that it will not participate in the newly proposed national asset reconstruction corporation (NACL) or the ‘bad bank,’ claiming that it will be able to recover more money through other means.

 Yes Bank had already reached out to RBI for the approval of its ARC after declaring its financial results for the fourth quarter of 2021 but RBI had declined. 

Yes bank reported a gross NPA ratio of 15.6 percent in the first quarter of the fiscal year 2021-22, up from 15.41 percent the previous quarter, and a net NPA ratio of 5.78 percent, down from 5.88 percent. Slippages were Rs. 2,223 crore, with recoveries and upgrades totaling Rs. 2,325 crore.

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