American personal fairness companies Cerberus Capital and JC Flowers & Co. have submitted competing binding bids to purchase a majority stake in Sure Financial institution’s proposed asset reconstruction firm (ARC), mentioned two individuals conscious of the matter.
Nevertheless, two different shortlisted US companies, Oaktree Capital and Apollo World Administration, have withdrawn from the race to arrange the ARC to deal with the personal lender’s unhealthy loans of greater than ₹54,000 crore, the individuals cited above mentioned requesting anonymity.
A complete of 13 firms have been vying final yr to amass the unhealthy loans. EY, which is advising Sure Financial institution, shortlisted 4 bidders who have been requested to submit binding bids by 25 January.
Sure Financial institution will personal a 20% stake within the proposed ARC with rights to nominate the chairman and key managers, Mint reported in January.
“Each bidders have submitted bids within the vary of ₹10,000 to ₹12,000 crore,” one of many two individuals mentioned.
Sure Financial institution, JC Flowers and Cerberus didn’t reply to emailed queries.
A profitable sale of unhealthy loans is essential for the revival of Sure Financial institution, which has been trying to elevate funds from exterior buyers to shore up its steadiness sheet. The financial institution’s board not too long ago authorized a fundraising of ₹10,000 crore by a mixture of debt and fairness.
Mint reported on 4 February that distressed asset investor Eight Capital ended a partnership with JC Flowers and London-based Emso Asset Administration to bid for Sure Financial institution’s ARC after variations emerged over valuation.
Brookfield Asset Administration, Ares SSG Capital, Varde Companions, CarVal Traders, Avenue Asia Group, India Resurgent Fund—a three way partnership between Piramal Enterprises and Bain Capital Credit score, Rohatyn Group and Silver Level Capital have been among the many 13 shortlisted candidates, Mint reported on 2 September.
In March 2020, the Rana Kapoor-founded financial institution was bailed out after State Financial institution of India and a few personal lenders made a ₹10,000-crore capital infusion to maintain it afloat. Sure Financial institution, now backed by the nation’s largest lender, had stipulated that an investor ought to have minimal belongings beneath administration and funds deployed globally of not less than $5 billion.
In August, Mumbai-based Sure Financial institution invited expressions of curiosity to arrange the ARC. The Reserve Financial institution of India had earlier rejected Sure Financial institution’s utility to begin an ARC, citing battle of curiosity, Mint reported in March final yr. This led the financial institution to tweak the proposed ARC’s construction to carry a minority stake and discover extra shareholders to beat the regulatory hurdle. Sure Financial institution has additionally arrange a separate group to handle the unhealthy loans.
In a post-earnings name with buyers in January, Sure Financial institution’s managing director and chief govt Prashant Kumar mentioned that the financial institution plans to switch confused belongings to the ARC by the tip of this monetary yr.
“We are attempting to, say, do it by March-end, however due to the covid uncertainties and regulatory approvals, it could slip to the following quarter, i.e., the primary quarter of the following monetary yr. However we are attempting to conclude it by March-end,” Kumar mentioned.
“We’re organising an ARC and want to shift our total non-performing mortgage (NPL) portfolio. So, we might expect that when this transition is over, we might be having nearly like zero NPL form of factor,” he added.
Supply: Live Mint