Yes Bank will raise $1. 1 billion (around Rs 8,900 crore) from funds affiliated to two global private equity firms — Carlyle and Advent International. Each investor will potentially get a 10% stake in the private lender.
In a statement issued here, the bank said it would issue 370 crore equity shares on a preferential basis for Rs 13.8 per share and 257 crore warrants at Rs 14.8 per warrant, adding Rs 8,900 crore to its equity capital base. The deal was announced after market hours, with the bank’s shares closing 2.5% up at Rs 15.
SBI, HDFC, ICICI Bank, Axis Bank, and Kotak Mahindra Bank are among the investors who stepped in to bail out Yes Bank after its collapse two years ago. These investors have their shares locked in until March 2023 for a big chunk of their holding, and at current valuations, they would have earned a return of 50% on their investment.
Yes Bank MD & CEO Prashant Kumar said, “We are not aware of any large financial institution that has successfully come out of reconstruction. In most cases, there has either been a merger or a liquidation. We have come out successfully with the formation of a new board, and all the issues facing the bank have been addressed. There has been growth both on the loan and deposit sides. We are also innovatively addressing the NPAs (non-performing assets) by getting them off the bank’s book and ensuring that the upside in recovery continues to flow to us. ”
The capital raise is subject to shareholders’ approval at the EGM of the bank to be held on August 24, 2022, and relevant approvals. Once approved, this would be one of the largest private capital raises by an Indian Private Sector Bank “The $1.1 billion we raise and the quality of investors we bring will raise confidence. We have stood by our word and are raising fresh equity after completing two years after our initial fund raise of Rs 15,000 crore in July 2020, although many thought that we would be back earlier. And this time, the equity raise is not for survival but growth. Since the bank is out of reconstruction, the capital adequacy ratio also should be in line with peers,” said Kumar.