Yes Bank and Bandhan Bank have sold a majority of their distressed loan portfolio to asset reconstruction companies to start fiscal year 2024 with a clean slate.
“Last quarter, special situation funds have initiated talks with IDBI Bank to acquire as much as ₹25,000 crore of non-performing loan book,” said one of the persons cited above. “The talks between the lender and fund houses are in the initial stage. IDBI Bank has made it clear that it will accept only an all-cash deal, implying that only those with deep pockets should bid.”
PNB Housing Finance has invited offers to sell about ₹3,000 crore loan book comprising 7-8 large accounts. Alvarez and Marsal, which is advising the housing finance lender, has shortlisted four to five fund houses last week for the portfolio sale, one of the persons cited above said.
Sicom, the government-owned term lending institution, on April 5 invited offers to sell 48 accounts with dues of ₹9,724.5 crore. Sidbi has invited expressions of interest on April 17 for the portfolio, which has five pools of loans. The lenders have proposed an e-auction on May 25.
These lenders have proposed to hold a Swiss challenge auction if they accept the offer given by the anchor bidder, the person said.
Last year, Yes Bank sold almost ₹48,000 crore to JC Flowers Asset Reconstruction Company, while Bandhan Bank sold ₹13,800 crore in two tranches to Kotak Mahindra Bank-backed Phoenix ARC. L&T Finance sold ₹2,707 crore of accounts to Avenue Capital-backed Asset Reconstruction Company of India.While both L&T Finance and Yes Bank sold their NPAs under the 15:85 structure, Phoenix ARC paid a substantial portion of the consideration in the form of cash to Bandhan Bank.
The proposed sale of NPA by IDBI Banks comes when its principal shareholders – the government and LIC of India – are seeking buyers for the sale of their 60.7% stake in the bank. IDBI has a gross NPA of ₹23,535 crore as of the end December 2022 which is 13.8% of its gross loan book.
The portfolio of ₹25,000 crore NPA that the bank shortlisted also includes write-off loans and recovery on these accounts will directly reflect in their bottom line, a person cited above said.