ARCION is a joint venture between Apollo Global Management and
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Loses out to Cerberus Capital Global Private Equity Fund JC Flower & Company as the anchor bidder for the stressed portfolio of Yes Bank as it did not have an ARC unlike JC Flowers & Co.
“Apollo, which holds a 90.1% stake in ARCION, has approached the Reserve Bank of India to sell its entire stake to Cerberus,” said one of the two individuals mentioned above.
“separately, Cerberus ICICI is in talks with Bank to acquire its entire 9.9% stake in ARCION,” said another person.
Cerberus will not require central bank approval for ICICI Bank stake as the banking regulator’s approval is required only if the ownership is above 10%. The people mentioned above said that Cerberus has to offer to acquire ARCION in a similar way.
Cerberus, Apollo and ICICI Bank did not respond to ET’s queries for comment.
Yes Bank announced JC Flowers ARC as the anchor bidder for the Swiss challenge auction of its Rs 48,000 crore non-performing loan portfolio, while a nominal higher offer was made from Cerberus Capital.
Last week, Cerberus entered into a strategic alliance with ARCION to submit an expression of interest for Yes Bank’s portfolio. This is mainly because Yes Bank has invited EoI for sale of its portfolio stating that to be eligible, the bidder should be an ARC.
It further states that if an investor (private equity fund, finance company or foreign institutional investor) has entered into an agreement with an ARC to acquire the portfolio, the signing authority for the EOI document should be the ARC, irrespective of whether the investor And whatever be the arrangement between the investor. ARC. It is also stated that the bank will allocate loan in favor of ARC.
These terms made it mandatory for Cerberus to tie up with an ARC if it were to acquire the troubled portfolio.
As per the Request for Proposal (RFP), the counter offer for the NPA pool of Yes Bank should be at least 10% higher than that of the anchor bidder.
JC Flowers ARC has an anchor offer of Rs 11,100 crore; Therefore, the counter bid should be at least Rs 12,200 crore. These loans will be sold under a 15:85 structure with 15% being paid upfront, and the remaining 85% in the form of security receipts that will be paid to the bank as the ARC recovers money from defaulters.
A senior bank official said in a recent press conference that Yes Bank has expressed its intention to invest Rs 350 crore for a 20% equity stake in JC Flowers ARC. The official also indicated that the bank will soon acquire a 9.9% stake in JC Flowers ARC.