IDBI Bank’s Stressed Assets Stabilisation Fund (SASF), which was looking to recover 11.59% from the sale of non-performing loans worth ₹6,151 crore, has hit a roadblock.
Despite receiving 18 expressions of interest from asset reconstruction companies (ARCs) in the initial bidding round, the final round failed to secure any confirmed bids.
Following the lack of interest, the reserve price for the auction has been reduced to ₹642 crore. The lender has launched another process on July 12. The deadline for submitting EOIs is July 16. The sale will be 100% cash-based, with EY running the process as the advisor.
“After the last round did not get binding bids, SASF has reduced the recovery expectation to 10%,” said a source. “Although a couple of ARCs were seriously looking at the accounts, it is not clear how many will come forward with a confirmed bid this time.”
In the initial round, large asset reconstruction companies including Arcil, JC Flowers ARC, JM Financial ARC, ACRE, Kotak-backed Phoenix ARC, UV ARC, Prudent ARC, Omkara ARC, and CFM ARC had shown interest. Later Edelweiss requested the removal of its name from the list.
The portfolio up for assignment and sale includes 239 cases, with 81 backed by tangible securities and guarantees, having a gross principal outstanding of ₹2,179.51 crore. The remaining 158 cases are supported by guarantees and claims, with an outstanding debt of ₹3,971.65 crore.
SASF was established in the FY2005-06 budget as a special purpose vehicle trust to acquire stressed and non-performing assets from the former Industrial Development Bank of India, which was transformed into a full-fledged bank and renamed IDBI Bank.
The trust, which managed ₹9,000 crore of distressed loans acquired from the development finance institution, has recovered most of the loans, with the remaining being sold now. The fund is winding down as it completes its 20-year life cycle.
