J.C. Flowers & Co. acquires NPA portfolio from YES BANK

J.C. Flowers & Co. said that the J.C. Flowers Asset Reconstruction Company (ARC) has closed the acquisition of a pool of nonperforming assets (NPAs) from YES BANK, an Indian private sector bank.

The acquired NPAs have a principal balance of INR 480 billion ($6 billion), said the American private investment firm.

Prashant Kumar — YES BANK CEO said: “There has been a lot of interest in India from global investors but very few actual transactions, and we believe our partnership with the J.C. Flowers ARC can serve as a model for other Indian financial institutions to follow.

“The turnaround YES BANK has already accomplished in one year has been impressive, but by partnering with one of the world’s premier private investors, we hope to transform completely YES BANK’s balance sheet and restore our position as a leading Indian lender.”

According to J.C. Flowers & Co, the purchase price of the portfolio was INR 112 billion ($1.4 billion) as of March 2022.

After the acquisition, J.C. Flowers Asset Reconstruction Company will be the manager for the NPA portfolio workout to streamline recoveries, with various key people having worked on it at YES BANK.

J.C. Flowers Asset Reconstruction Company bought a 15% vertical slice of the NPAs while the Indian banking group will retain the balance in the form of security receipts.

The acquired NPA portfolio is made up of nonperforming and underperforming large corporate loans with substantial real estate and infrastructure assets.

J.C. Flowers & Co. has also forged a partnership with YES BANK under which the latter will acquire a stake of up to 19.99% in J.C. Flowers Asset Reconstruction Company.

Chris Flowers — J.C. Flowers & Co. CEO said: “This transaction, which marks the single largest non-performing asset sale ever in India, continues our firm’s tradition and reputation for undertaking the most complex and interesting investments in the financial services industry.

“When we established our ARC we saw strong opportunities in participating in the workout of India’s non-performing loans, and we look forward to working with the YES BANK team.”