Eight new investors have expressed interest in acquiring fresh stake in the bank. These include three institutional investors and five family offices, Yes Bank said after almost 12-hour long board meeting that was held on November 30.
The board of directors of Yes Bank has taken a decision to raise upto $2 billion through the preferential allotment of the company's shares, according to release filed with the exchanges.
Eight new investors have expressed interest in acquiring fresh stake in the bank. These include three institutional investors and five family offices, the private lender said after almost 12-hour long board meeting that was held on November 29.Canadian industrialist Erwin Singh Braich and SPGP Holdings that is backed by Braich will be bringing in the largest chunk of $1.2 billion. However, Yes Bank said that discussions were still on and are expected to conclude shortly. Also, the binding term sheet received from them has been extended till December 31, 2019.
Aditya Birla Family Office has shown interest to infuse $25 million, Citax Holdings Ltd. & Citax Investment Group $500 million, GMR group & associates $50 million and Rekha Jhunjhunwala will infuse $25 million, the bank said.
Other investors include a top tier US fund house-which the bank is yet to reveal-will bring in $120 million, Discovery Capital $50 million and Ward Ferry will invest $30 million, according to Yes Bank.
“None of the Investors will be allotted equity shares such that their holding exceeds 25 percent of the share capital of the bank,” the private lender said.
Yes Bank said that the board of directors will reconvene on December 10 to finalize and approve the details of preferential allotment. The bank will also call for an extra-ordinary general meeting to obtain the approval of shareholders.
Yes Bank said that the preferential allotment will be subject to regulatory and statutory approvals.
As per rules laid down by the Reserve Bank of India (RBI), any acquisition of shareholding or voting rights of 5 percent or more would be subject to obtaining prior approval from the regulator. In the case of financial institutions, the shareholding has been capped at 10 percent.
The investor will also have to pass the RBI's "fit and proper" criteria to own a stake in a bank.
The bank has to maintain at least 26 percent of shareholding in the hands of domestic investors at all times. Foreign shareholding in YES Bank was around 40 percent as on March 2019, its annual report showed.Yes Bank is in dire need of fresh equity infusion to not only support its credit growth but also to maintain capital adequacy requirements amid rising bad loans.
Last month, the bank’s CEO Ravneet Gill had said that the bank had offers of more than $3 billion on the table.
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.
Apart from capital, the bank also needs to keep its asset quality from deteriorating further and control further slippages.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.LIVE NOW... Video series on How to Double Your Monthly Income... where Rahul Shah, Ex-Swiss Investment Banker and one of India's leading experts on wealth building, reveals his secret strategies for the first time ever. Register here to watch it for FREE.