Cerberus ties up with ARCION for Yes Bank’s NPAs

Despite a higher offer, Cerberus lost out as it does not own an ARC- unlike JC Flowers, which operates an ARC. In order to place itself on an equal footing, Cerberus has roped in ARCION Revitalization, an ARC joint venture between Apollo Global Management and

, to submit a joint bid, said people aware of the development.

Avenue Capital-backed Asset Reconstruction Company of India (Arcil) also submitted an expression of interest separately. JC Flowers ARC, as the anchor bidder, will have the right to match counterbids.

Yes Bank, meanwhile, aims to complete the sale process by the end of this quarter. The lender had received binding offers from JC Flowers ARC and Cerberus in mid-May following which the bank declared JC Flowers ARC as the highest bidder.

“Yes Bank has declared H1 bidder as it owned an operating ARC, although Cerberus submitted a slightly higher offer than JC Flowers ARC,” said one of the two persons cited above. “It was, therefore, imperative for Cerberus to tie up with an ARC,” the same person said.

ARCIL, Cerberus and Yes Bank did not respond to ET’s request for comments. ARCION could not be reached for comment.

Yes Bank has invited expressions of interest for its NPA portfolio by July 23. The EoI bidders will be given three weeks to complete the due diligence, which will be followed by a Swiss challenge auction.

As per the request for proposal (RFP), the counteroffer for Yes Bank’s NPA pool must be at least 10% higher than the anchor bidder to be eligible. Hence, the counter bid must be worth at least ₹12,200 crore. These loans would be sold under a 15:85 structure wherein 15% would be paid upfront, and the remaining 85% would be in the form of security receipts that would be paid to the bank as the ARC recovers money from defaulters.

Cerberus was in talks with Blackstone-backed International Asset Reconstruction Company to jointly acquire Yes Bank’s stressed portfolio, but the negotiation remained inconclusive, people cited above said.

Yes Bank has expressed its intent to invest ₹350 crore in JC Flowers ARC for a 20% equity stake, a senior bank official said at a recent press conference. The bank official also indicated the lender would soon acquire a 9.9% stake in JC Flowers ARC.

The bank is also in talks with Carlyle and Advent Capital for raising $1 billion equity, a move that would boost its capital and help expand its loan book.

ET reported last week that senior officials of Carlyle and Advent Capital are in India to finalise the structure of the deal.