Yes Bank, one of the leading private banks in India, is set to recover about half of its dues from Katerra India, a construction technology company that is undergoing corporate insolvency. The bank had an outstanding debt of ₹521 crore to the company, which it decided to sell to an asset reconstruction company (ARC).
Prudent ARC Matches Arcil’s Counter-Offer
The bank had received a binding offer of ₹165.6 crore from Prudent ARC, a Mumbai-based ARC, for its Katerra India debt, as reported by The Economic Times in the last week of January. However, the bank decided to hold a Swiss challenge auction, where it invited other ARCs to make counter-offers, giving Prudent ARC the first right to match them.
Asset Reconstruction of India (Arcil), the country’s oldest and largest ARC, gave a counter-offer of ₹203.4 crore, which Prudent ARC matched on Monday, said people with knowledge of the matter. Prudent ARC and Yes Bank are expected to close the transaction by the end of this month, the people said.
Yes Bank Shares Gain on Debt Recovery News
The news of the debt recovery from Katerra India boosted the share price of Yes Bank on Tuesday. The stock gained 4.52% to close at ₹452.35 on the National Stock Exchange (NSE), outperforming the Nifty Bank index, which rose 2.38%.
Yes Bank shares have delivered a multibagger return of 113% in the past two years, as the bank has improved its financial performance and asset quality after being rescued by a consortium of lenders led by State Bank of India in March 2020.
Katerra India Faces Liquidation
Katerra India, a subsidiary of US-based Katerra Inc., was admitted for corporate insolvency in September 2020 by the National Company Law Tribunal (NCLT) on a petition filed by one of its operational creditors. The company had defaulted on loans worth ₹1,200 crore from various lenders, including Yes Bank, HDFC Bank and Axis Bank.
Katerra Inc., which was backed by SoftBank Group Corp., filed for bankruptcy protection in the US in June 2020 after facing losses and project delays due to the Covid-19 pandemic. The company had raised over $2 billion from investors and had a valuation of $4 billion in 2018.
Katerra India had operations in Bengaluru, Chennai, Hyderabad and Pune, and was involved in several residential and commercial projects across the country. However, none of the resolution applicants showed interest in taking over the company during the insolvency process, and the committee of creditors (CoC) voted for liquidation in December 2020.
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