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Struggling Yes Bank delays Q3 results but says it has 'prominent' investors lined up

The private lender said that the new investors include J.C. Flowers & Co. LLC, Tilden Park Capital Management LP, OHA (UK) LLP (part of Oak Hill Advisors) and Silver Point Capital.

February 12, 2020 / 10:26 PM IST
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Yes Bank on February 12 said it has received non-binding expressions of interests (EOIs) and is currently in discussion with “several prominent investors” for capital raising. The private lender also informed exchanges that the third-quarter earnings will be delayed beyond the regulatory timeframe.

“Given that the current capital raising process has the bank’s fullest attention, it would like to inform the exchanges that it will publish its unaudited financial results for the quarter and nine-month period ending December 31, 2019, on or before March 14, 2020,” Yes Bank said in an exchange filing on February 12.

The private lender said that the new investors include J.C. Flowers & Co. LLC, Tilden Park Capital Management LP, OHA (UK) LLP (part of Oak Hill Advisors) and Silver Point Capital.

“The bank and its financial advisors are currently in discussions with these investors on the commercial terms, including pricing, of their investments which, it may be noted, will be subject to certain conditions and receipt of requisite approvals, including regulatory approvals with respect to the size of the stake to be acquired, as well as necessary dispensations with regard to applicable pricing guidelines,” Yes Bank said.

As per banking norms, a single investor cannot own more than 10 percent in a private bank. Also, any acquisition of shareholding or voting rights of 5 percent or more would be subject to obtaining prior approval from the Reserve Bank of India.

This is the second list of fresh investors that the bank has released since November 2019. The first list included names of Canadian industrialist Erwin Singh Braich, SPGP Holdings, Citax Holdings and Citax Investment Group. MD & CEO Ravneet Gill had said the bank had offers of $3 billion on the table.

Last month, the bank’s board rejected Braich’s $1.2 billion offer and had decided to consider the offer of $500 million from Citax Holdings and Citax Investment Group.

“While we shall keep the exchanges apprised of progress with respect to capital raising, in the meantime, we request you to kindly take note of our decision to announce our quarterly financial results for Q3 FY 2019-20 on or before March 14, 2020,” Yes Bank said.

As per regulatory norm, a company must declare results within 45 days of a quarter end.

On February 7, the bank received shareholders' approval to increase authorised share capital of the bank to Rs 1,100 crore from Rs 800 crore and to raise up to Rs 10,000 crore via issuance of equity shares or other convertible securities.

As per media reports, Yes Bank has appointed global investment bank Cantor Fitzgerald, Ambit Capital and IDFC Securities to help with its fundraising plans. Cantor Fitzgerald is led by Gill’s former colleague and mentor Anshu Jain.

The capital-starved lender is running out of time to shore up it capital adequacy levels to stay above regulatory requirement and provide for bad loans as it continues to report higher slippages quarter after quarter.

Last month, the bank issued a statement to allay fears of falling capital adequacy.

"The bank's overall Capital Adequacy Ratio is comfortably above regulatory requirements and all efforts are being made to financially strengthen the bank even further. Kindly, therefore, pay no heed to these unfounded reports," the lender said in a statement.

The bank’s capital adequacy ratio stood at 16.3 percent with Tier-1 ratio at 11.5 percent as of September 30. In the previous quarter it had slipped to 15.7 percent and 8 percent respectively, following which Yes Bank raised Rs 1,930 crore via qualified institutional placement (QIP) in August.

Yes Bank’s bad loans have risen sharply over the past year. In the July-September quarter, its gross non-performing assets (NPA) ratio was at 7.39 percent, as compared to 5.01 percent in the previous quarter.

Moneycontrol News
first published: Feb 12, 2020 09:15 pm