Yes Bank shares jumped nearly 4 percent in the morning trading hours of August 29. This comes after a report by the Economic Times said that SMBC is set to invest Rs 16,000 crore ($1.83 billion) in the Indian private lender through a combination of equity and debt.
The proposed infusion by the Japanese financial giant is aimed at strengthening Yes Bank's balance sheet, and is seen to be a precursor to SMBC taking an ownership position, ET reported, citing people familiar with the matter. The reported infusion will comprise Rs 7,500 crore in equity, and Rs 8,500 crore in debt.
This will be in addition to the Rs 13,500 crore that SMBC has committed to pay the lender's existing shareholders, including State Bank of India (SBI) and others, for acquiring a 20 percent stake in Yes Bank, the report further said.
The Rs 16,000-crore infusion will be reflected in Yes Bank's books, while the Rs 13,500 crore will be paid to the bank's shareholders to facilitate their exit, according to the report.
Moneycontrol couldn't independently verify the report.
As part of the debt funding, SMBC will opt for yen-dominated bonds equivalent to Rs 8,500 crore, priced below 2 percent, to ensure low-cost, long-term funding, ET cited a source as saying. The equity infusion of Rs 7,500 crore will be done through a foreign currency convertible bonds (FCCBs), in order to boost its capital, the source added.
Last week, Yes Bank said that the RBI has accorded approval to Japan-based Sumitomo Mitsui Banking Corporation (SMBC) to acquire up to 24.99 percent stake in the lender. This came after Yes Bank in May disclosed that SMBC proposed to acquire 20 percent holding in the lender through a secondary stake purchase of 13.19 percent stake from the State Bank of India (SBI) and 6.81 percent share from seven other shareholders.
Other shareholders are Axis Bank, Bandhan Bank, Federal Bank, HDFC Bank, ICICI Bank, IDFC First Bank and Kotak Mahindra Bank.
Yes Bank shares were trading at around Rs 19.41 apiece in the morning. The shares have gained nearly 16 percent in the past six months, and have a P/E ratio of over 21.
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