Yes Bank selects Jesse Flowers to secure $6 billion bad loan

The bank said that on July 13, with the final approval from the Board Credit Committee of Yes Bank, the bank signed a binding term sheet with JC Flowers for the strategic partnership.

The bank said it now proposes to conduct a Swiss challenge bidding process to sell its bad debt portfolio, using JC Flowers ARC’s bid as the minimum bid amount. However, JC Flowers will be allowed to match the amount if the rival bidder exceeds the base bid.

The Swiss Challenge auction process was scheduled to begin on Friday. US private equity firm Cerberus Capital, which was in the race to buy out Yes Bank’s bad loans, was also expected to take part in the Swiss challenge, two people on condition of anonymity said.

Jesse Flowers evaluates Yes Bank’s bad loan book 12,107 crore, said one of the two people.

Yes Bank will now invest Rs 400 crore for 20% stake in JV with JC Flowers ARC. As part of the deal, the private sector lender sought a $50 million guarantee from potential suitors who bid for the NPA. In addition, Jessie Flowers was required to resolve a shareholder dispute with Eight Capital prior to the acquisition, the people cited above said.

Earlier this year, Eight Capital pulled out of the joint venture with JC Flowers because of differences over bidding for Yes Bank’s bad loans. The distressed manager is also awaiting the Reserve Bank of India’s nod for a stake sale.

Once the stake purchase of Yes Bank is completed, the lender will participate in the rights issue in proportion to its stake 1,800 crores.

The other person, on condition of anonymity, said that the money would be used by the ARC to meet the 15% cash payment to buy the bad loans of Yes Bank.

As per RBI requirements, ARCs are required to purchase bad loans from any lender under the 15:85 structure, where 15% of the net value of the asset is required to be paid in advance, while the remaining 85% is required to be paid in the form of security receipts. is paid in. , The deal will pave the way for Yes Bank to clean up its books and raise more capital for business growth.

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