According to persons with knowledge of the bank, IDBI Bank has engaged EY India as the process adviser to locate purchasers for its portfolio of Rs 4,000 crore in distressed debt, which is housed under the Stressed Assets Stabilisation Fund (SASF). According to the persons, EY has been ordered by the bank to finish the deal within six and a half months.
Twenty years ago, when the term-lending organisation IDBI Ltd. amalgamated with its subsidiary IDBI Bank to become a commercial bank, a special-purpose vehicle known as SASF was established.
In 2004, the government granted IDBI permission to temporarily transfer its distressed loans to IDBI Trust, which took over the management of Rs 9,000 crore in distressed loans that IDBI had obtained under SASF. The trust paid back the majority of the loans, but the remaining amount is currently being sold.
According to ET's report on October 30, the fund is being liquidated as it reaches the end of its 20-year lifespan. EY has enlisted Cyril Amarchand Mangaldas as its legal advisor.
One of the persons stated that IDBI Bank expects to recoup between 15 and 18 per cent from the sale of the portfolio. With Rs 4,000 crore in principal loans, it has 631 accounts. Daewoo Motors, Malvika Steel, Mardia Chemicals, Rajinder Steels, Steel Tubes of India, Surana Oil, Usha Ispat, and Western India Shipyard are a few of these.
The bank's promoters are getting ready to sell off a portion of their holdings at the same time as the distressed asset portfolio sale. The government controls 45 per cent of the bank, with Life Insurance Corporation owning 49.2 per cent. They intend to sell a combined 60.7 per cent share.
Two decades ago, SASF received a Rs 9,000 crore loan from the government through a two-step process. Simultaneously, SASF purchased equivalent-value zero-coupon government bonds.