Yes Bank is in advanced stages of talks to close a $1 billion equity fund from private equity firm Carlyle and Advent International, two people familiar with the development said.
Fundraising talks were progressing slowly due to the Asset Reconstruction Company (ARC) deal that Yes Bank was going through to clear off a major chunk of the bad loans on its books, said the people mentioned above. Fundraising talks with Carlyle and Advent gained momentum with the bank deciding to partner with Jesse Flowers for ARC, and discussions are likely to end soon. However, it may take some more time as the bank is seeking shareholder approval for a new board of directors.
Emails sent to Yes Bank and Advent did not elicit any response. Carlyle declined to comment.
Mint reported on June 2 that Yes Bank has selected JC Flower Asset Reconstruction Company as its partner, to close off bad loans. 49,000 crore as the lender tries to clear its books and raise capital to fund loan growth. JC flower offer 12,107 crore against bad loan book, ensuring recovery of 25%. Yes Bank will have to invest 400 crores in JC Flowers ARC to take 20% stake in the company.
The payment for the bad loan book by the JV will be done under the 15:85 structure, wherein 1,800 crore, or 15% of the agreed amount, is to be paid in cash to Yes Bank. The rest will be paid in security receipts, which will be encashed as ARC recovers money from defaulters.
Key bad loan book 49,000 crore includes so-called technical write-off value 17,000 crore and bad investment.
On June 8, the bank announced that it had started the process of exiting the reconstruction scheme set up two years ago, when the government and the Reserve Bank of India put in place a special plan to save Yes Bank.
The board of directors appointed under the plan recommended the establishment of an alternate board and sought shareholders’ approval following significant progress in winding up the bank. The proposal will be considered at the annual general meeting of the bank on July 15.
swaraj.d@htlive.com