Private sector Yes Bank is planning to form an asset reconstruction company (ARC) in partnership with a foreign lender and three public sector banks — Bank of Baroda, Union Bank of India and Bank of India — in the next 6-9 months.
Sources close to the development said that the ARC would be capitalised at about Rs 110 crore. While Yes Bank will hold a 29.5 per cent stake in the venture, the three local banks will have a combined 33 per cent stake and the balance 37.5 per cent being offered to the foreign partner.
Yes Bank, which was earlier in talks with JP Morgan for its ARC foray, is now scouting for a new foreign partner.
“The foreign partner would be a US-based lender. The bank has received the first level of RBI approval, but the foreign partner has not yet been finalised,” said the source.
According to the foreign direct investment (FDI) norms, a foreign partner cannot hold more than 49 per cent stake in an Indian firm. For taking stake in the ARC, the foreign partner will also have to seek an approval from the Foreign Investment Promotion Board (FIPB). “With the stock of non-performing assets (NPAs) growing with Indian banks, there could not be a better circumstance than now to enter the ARC business. Yes Bank expects to acquire assets worth more than Rs 1,000 crore during the first year for the business,” the source added.
However, unlike other established ARC players such as Arcil and IARC, the Yes Bank-led ARC is not expected to look at acquiring retail NPAs from banks.
“To begin with, Yes Bank will look at acquiring long-term assets, mostly on the corporate loan books,” the source said.
After closing investments for the Global Environment Fund, Yes Bank is looking at launching its second private equity fund — Distressed Assets Fund — in April. The bank has partnered with a West Asian bank to launch this Rs 500-crore fund.
The bank plans to launch a Rs 300-crore Social Sectors Fund, a real estate fund, and an infrastructure fund in the next two years.
