IDFC Bank sells power sector loans worth ₹2,500 cr to EARC

IDFC Bank sold 12 power sector loans worth ₹2,500 cr to Edelweiss ARC at one-forth of the price. In a bid for smooth merger with Capital First the bank sold its bad loans, the Economic Times cited 2 senior officials stating this.

Edelweiss Asset Reconstruction Company (EARC) is in the business of acquiring Non-Performing Assets (NPAs) from banks and financial institutions and resolving them through appropriate resolution strategies enunciated in the SARFAESI

The merger was announced in January this year and the RBI sent ‘no objection’ statement in June.

Assets sold

These include Monnet Power, Jaiprakash Power Ventures and GVK Industries (Goinwal Saheb), V S Lignit, Wind World India and NSL Renewable Power. It was an all cash transaction.

‘There was a Swiss challenge auction held last week wherein Edelweiss emerged as highest bidder. The transaction closed early this week ‘, said the official.

Bank statement

In an email response to ET, the bank said -‘Over the last several quarters, the management, in its guidance to investors, has made clear its intent to reduce the portfolio of stressed assets through active resolution or sale to ARCs. This transaction is a proactive step in that direction. As already shared with the market, IDFC Bank expects to have fully cleaned up its legacy portfolio of stressed assets by the end of the current quarter.’

Shareholders approve merger

IDFC bank shareholders approved the merger with Capital First, Capital First Home Finance and Capital First Securities on Monday.

‘The resolution approving the amalgamation was passed by the equity shareholders with an overwhelming majority of 99.98 per cent votes in favour of the resolution,’ IDFC Bank said in a regulatory filing on Tuesday.

Capital First will have its shareholder meeting on October 4.


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