Cerebrus Capital and Asset Reconstruction Company Ltd (ARCIL) have dropped out of the race to acquire Yes Bank’s Rs 48,000 crore bad loan portfolio, according to a banker aware of the matter.
This comes after ARCIL pulled out of consortium, which finally ended up not submitting a counter bid.
Yes Bank had received the counter bid from ARCIL-Cerebrus consortium last month under the Swiss Challenge method after accepting the term sheet from the highest bidder JC Flowers for ₹11,183 crore.
A Swiss Challenge gives rivals an opportunity to outdo the winning bidder. If there is such a bid and the winning bidder refuses to match it, the challenger can walk away with the deal. One of the conditions under this method was that the counter offer for the NPA pool can be made only by an ARC and must be at least 5% higher than the anchor bidder to be eligible.
According to the transaction, the stressed loans will be sold under the 15:85 structure, with ₹1,800 crore, or 15% of the agreed amount, to be paid upfront in cash to Yes Bank. The rest will be paid in security receipts to be redeemed as the ARC recovers money from defaulters. Yes bank plans to invest up to Rs 350 crore for a 20 per cent stake in JC Flowers ARC
For Cerebrus, this is the second attempt to bid for Yes bank’s NPA portfolio. Mint had reported on 10 February 2022 that Cerberus was in talks with Blackstone-backed International Asset Reconstruction Company to jointly acquire Yes Bank’s stressed portfolio, but the negotiation remained inconclusive.
Cerebrus, which has been a strong contender for the assets, had lost out to JC Flowers ARC in the initial bidding round as it does not own an ARC.
Emails to Yes bank and Cerebrus went unanswered.
Yes Bank’s exposure to Essel Group, Radius group, Anil Dhirubhai Ambani Group are among the loans sold to the ARCs
Last month Yes Bank Ltd board had approved raising ₹8,898 crore ($1.1 billion) by selling shares and warrants to private equity investors Carlyle Group and Advent International, a move that would bolster the private lender’s capital position.
