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Cerberus, Oaktree, JC Flowers in race to buy stake in Yes Bank\'s proposed ARC
Photo Credit: Reuters

Three US-based entities including private equity (PE) fund Cerberus Capital Management, New York-based investor JC Flowers & Co. LLC and alternative asset manager Oaktree Capital Management have been shortlisted to pick up around 49% equity stake in the proposed asset reconstruction company (ARC) to be set up by Yes Bank Ltd. 

The three investment firms were chosen among 12 players which had submitted expressions of interest (EoIs) based on their proposals and plans for the structure of the ARC, two people aware of the development confirmed to VCCircle. Moneycontrol first reported the development.

Citing anonymous sources, the report said that Cerberus Capital is the frontrunner, followed by Oaktree. Currently, JC Flowers has a presence in India with its JC Flowers ARC – a joint venture (JV) with Indian distressed investor Eight Capital and London-headquartered Emso Asset Management.

Oaktree declined to comment on VCCircle’s queries while Cerebrus, JC Flowers and Yes Bank did not respond till this article was published. 

Besides the three investors, Brookfield Asset Management, Ares SSG Capital, Varde Partners, CarVal Investors, Avenue Asia Group, India Resurgent Fund – a joint venture between Piramal Enterprises and Bain Capital Credit, Apollo Global Management, Rohatyn Group and Silver Point Capital were among the 12 applicants, Mint had reported on September 2. 

Last year, JC Flowers & Co. LLC, Tilden Park Capital Management LP, Silver Point Capital and OHA (UK) LLP (part of Oak Hill Advisors)  were among the entities that showed interest in putting money into the then-struggling Yes Bank

In March 2020, the Rana Kapoor-founded bank was bailed out after State Bank of India (SBI) and some private lenders with a Rs 10,000-crore capital infusion to keep it afloat. 

Yes Bank, now backed by the country's largest lender, had stipulated that an investor should have minimum assets under management (AUM) and funds deployed globally of at least $5 billion. 

In August, Mumbai-based Yes Bank invited expressions of interest to set up the asset reconstruction company (ARC). It has hired EY as the process adviser. 

The Reserve Bank of India (RBI) had earlier rejected Yes Bank’s application to start an ARC, citing conflict of interest, Mint had reported in March this year. 

Following this, the mid-sized private bank has tweaked the structure of the proposed ARC offering to hold minority stake and find more shareholders to overcome the regulatory hurdle. 

For now, Yes bank has set up a separate business group for non-performing assets (NPAs) on May 1 with around 100 people to manage over Rs 50,000 crore NPA book. 

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