NARCL to make its first acquisition in Jaypee Infratech, Real Estate News, ET Real Estate

India’s state-sponsored bad bank is set to make its first troubled-debt acquisition since its formation a year ago. National Asset Reconstruction Company ,narcoemerged as the winning bidder for the loan of Jaypee Infratech Two people familiar with the development told ET that lenders failed to draw counterbids in the Swiss Challenge auction on Thursday.

Lenders expect to close the transaction by the first week of November. This would include NARCL getting ₹9,234 crore of stressed loans. In the first week of October, NARCL made binding bids of ₹3,570 crore for loans placed by public sector banks, triggering the Swiss challenge auction.

“Lenders received some Expressions of Interest (EoIs) but none of them made concrete offers,” said one of the persons mentioned above. NARCL will offer 39% recovery to lenders.

A Swiss challenge auction gives the anchor bidder – NARCL in this case the first right to match the counterbid, if any.

Phoenix ARCAditya Birla ARC and ARCIL were among the few stressed-asset buyers who submitted expressions of interest for Jaypee Infratechsaid the first person.

Over 24,000 homebuyers, fixed deposit holders and private lenders of Jaypee Infratech, which accounts for 62% of verified claims, have been excluded from the proposal made by NARCL, as it is aimed only at getting loans from PSU lenders. PSU banks account for 38% of the total financial creditors’ claims.
The sale of bad loans to NARCL began following instructions to bank heads by senior finance ministry officials in a closed-door meeting held in mid-September. The meeting was chaired by Sanjay Malhotra, Secretary, Department of Financial Services, which was attended by Chairman Dinesh Khara. state Bank of Indiaamong other bank CEOs, as reported by ET on September 19.

During the meeting, Malhotra asked lenders to sell 18 accounts totaling Rs 39,921 crore to NARCL by the end of October.

“It was an ambitious target as there are many holidays in October due to the festive season, but NARCL has picked up the pace of its activity,” a bank official said.

NARCL’s offer to lenders for Mittal Corp., SSA International, and Integrated Construction Association Swiss auction has started. NARCL has also made a binding offer for acquisition of debt of Rainbow Papers and Meenakshi Energy.