State-run Union Bank of India has invited interested entities to acquire non-performing assets (NPAs) totalling Rs 2,316 crore in 45 accounts through an open auction on August 23. The bank has set a reserve price for the accounts and expects a recovery of over Rs 1,750 crore, or around 75 per cent of the principal outstanding on these accounts.
The bank has invited expressions of interest from asset reconstruction companies (ARCs), banks, non-banking financial companies (NBFCs), financial institutions (FIs) and alternative investment funds (AIFs) by August 22, following which the bank will invite binding cash bids through an e-auction on August 23, with the highest bidder to be announced shortly thereafter.
In addition, the bank will conduct a Swiss challenge auction on August 31 for accounts that receive only one bid during the e-auction, as well as for accounts that receive more than one bid. For the Swiss challenge auction, expressions of interest must be submitted by August 30. Subsequently, during the Swiss challenge auction, interested entities will have to bid 5 percent more than the highest bid amount received during the e-auction.
Some of the large accounts in the list of 45 accounts that the bank has put up for sale include Leo Meridian Infra Projects with an exposure of Rs 263.53 crore, Sahara Hospitality with an exposure of Rs 261.90 crore, Panduranga Energy Systems with an exposure of Rs 230.26 crore, Hotel Horizon with an exposure of Rs 212.68 crore, Radius Infratel with an exposure of Rs 110 crore and AJS Impex with an exposure of Rs 108.82 crore.
Interestingly, the list contains some of the accounts that were not sold in the previous auction conducted by the bank in June, including Leo Meridian Infra Projects, Nirmal Lifestyle, Phadnis Properties, Paramount Steels, among others. In June, the state-run bank had invited bids from interested entities to acquire 25 defaulting accounts with a total outstanding of around Rs 1,268 crore. The bank received bids for only five of the 25 accounts it had put up for sale, with the rest of the accounts not attracting any bids due to high reserve prices set by the bank. The bank had subsequently called for a Swiss challenge auction in which only Jaypee Healthcare attracted a counter-bid.
In the quarter ended June 2024 (Q1FY25), the state-run bank’s gross non-performing assets (NPAs) stood at Rs 41,423 crore, down nearly 4 per cent sequentially, while net NPAs stood at Rs 7,902 crore, down 12.10 per cent sequentially. Its gross NPA ratio improved to 4.54 per cent and net NPA stood at 0.90 per cent.
First published: August 12, 2024 | 17:40 IS
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