Shares of Yes Bank jumped 5 percent on Wednesday after the private sector lender announced that its board has approved the sale of stressed assets worth around ₹48,000 crore to JC Flowers ARC. JC Flowers was the sole bidder for the lender's portfolio.
The stock rose as much as 4.8 percent to its day's high of ₹17.2 in a flat market. The scrip has advanced 28 percent in the last 1 year and 25 percent in 2022 YTD.
“The Swiss Challenge process has now concluded and the Bank not having received any Challenger Bids to the Base Bid, the Board of Directors of the Bank, at their Meeting held on September 20, 2022, has approved the declaration of JC Flowers ARC as the winner of the Swiss Challenge process,” the lender said in a BSE filing.
JC Flowers had submitted an initial bid of ₹11,183 crore for the NPA. After the Swiss Challenge process (done to invite challenger bids for the sale of stressed assets) concluded, the bank’s today board approved the declaration of JC Flowers ARC as the top bidder.
Yes Bank had invited bids for its bad assets portfolio soon after the Reserve Bank of India in March 2021 rejected its plan to set up an ARC as its subsidiary. As per Reserve Bank of India (RBI) guidelines on the transparent bidding process, the private sector lender had conducted a Swiss challenge for inviting challenger bids.
As per the binding term sheet between the bank, JCF ARC LLC and JC Flowers for the sale of the identified portfolio, the board members also approved the necessary investment for the acquisition of up to 19.99 percent equity stake in JC Flowers ARC by the bank, it said. The purchase can be made in single or multiple tranches, subject to regulatory approval.
"The bank will now proceed towards negotiating definitive agreements," Yes Bank added.
In the first quarter of the current financial year, Yes Bank reported an improvement in its asset quality, with gross non-performing assets (NPAs) falling to 13.45 percent of gross advances as of June 30, 2022, from 15.60 percent by June-end 2021. Net NPAs or bad loans too came down to 4.17 percent from 5.78 percent.
It reported a 50.17 percent year-on-year (YoY) rise in profit after tax (PAT) at ₹310.63 crore compared with ₹206.84 crore in the same quarter last year. Net interest income (NII) for the quarter jumped 32 percent YoY to ₹1,850 crore while the Net Interest Margin (NIM) for the quarter came in at 2.4 percent, up nearly 30 basis points YoY.