Yes Bank plans to invest Rs 350 cr in JC Flowers; raise USD 1 bn core capital in FY23

Yes Bank will invest up to Rs 350 crore for a potential 20 per cent stake in asset reconstruction company JC Flowers, which has emerged as the base bidder for the lender’s bad loans worth Rs 48,000 crore.

The private sector lender is planning to raise up to USD 1 billion in FY23 to bolster its core capital base once the NPA challenge is over, its managing director and chief executive Prashant Kumar told reporters here on Monday. The bank’s core equity ratio stands at 11.5 per cent right now and will go to over 14 per cent after the capital raise, he said, adding that even though the market conditions are not conducive right now, it would like to conclude the process in FY23 itself.

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Kumar said he feels the transfer of gross non-performing assets of over Rs 48,000 crore – which is legacy corporate loans gone bad – to the asset reconstruction company (ARC) will take care of the biggest challenge faced by the bank as it will reduce the NPAs to under 2 per cent from the present 14 per cent. He also said the bank has already begun a Swiss challenge process to have the highest bidder for the stock of NPAs and JC Flowers will have the right to match the price.

When asked about challenges faced by JC Flowers, Kumar said the ownership issues at the entity have been “resolved” to Yes Bank’s satisfaction. The entire process of getting the best bidder under the Swiss challenge and transfer of assets to the ARC will take up to 75 days, he said.