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Spandana Sphoorty Sells Distressed Loan Portfolio for Rs 95 Crore

Spandana Sphoorty Financial soared 4.64% to Rs 573.10 after its board approved the transfer of a stressed loan portfolio of Rs 95 crore on December 28, 2022.

Spandana Sphoorty Financial said in a filing to the exchange that its board has approved the transfer of its non-performing loan portfolio, including cancelled loans, to Asset Restructuring Corporation (ARC) for Rs 95 crore. As of September 30, the outstanding amount of the written-off portfolio was Rs 323.08 crore.

“Management committee of the company’s board of directors vide its resolution on Wednesday, December 28, 2022, has approved the transfer of stressed loan portfolio, including Rs 323.08 crore written-off loans outstanding as on September 30, 2022, to an asset reconstruction company under Swiss Challenge Method for a consideration of Rs 95 crore,” the firm said in the filing.

The Hyderabad-based microfinance institution said it would use the Swiss challenge method for the sale as required by regulatory norms for assets worth more than Rs 100 crore. Under the Swiss Challenge Method, bidders make an unsolicited offer to an auctioneer to purchase an asset. Once approved, the auctioneer seeks a counter-proposal against the original bidder’s proposal – known as a reserve price – and chooses the best of all options. The original bidder has the “right of first refusal”. If it agrees to match the offer, the winning bid is awarded to it; otherwise, it is awarded to the challenging bidder.

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