Private lender YES Bank announced Friday to raise equity worth of $1.1 billion (Rs 8,900 crore) through funds affiliated with global private equity investors Carlyle and Advent International. Each investor may acquire up to 10 percent, YES Bank said in a filing.
“This will be raised through a combination of $640 million (Rs 5,100 crore) in stock and $475 million (Rs 3,800 crore) through warrants on stock,” said YES Bank.
On Friday, YES Bank shares closed at Rs 14.94, up 2.47 percent from the previous close on the BSE.
“The capital increase will further strengthen YES Bank’s capital adequacy and support the bank’s medium to long-term sustainable growth goals. Once approved, it would be one of the largest private capital increases by a private sector Indian bank,” the report said.
The fundraising plan is subject to shareholder approval at the extraordinary general meeting to be held on August 24.
“We are delighted to have such breed investors as Carlyle and Advent International on board as our partners, in fulfilling the bank’s long-term strategy. This is a testament to the inherent strength of the bank’s franchise,” said Prashant Kumar, managing director and chief executive officer.
“We are excited about the increasing opportunities this partnership creates for us and are confident that both investors will play a critical role in the bank’s next growth phase,” said Kumar.
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YES Bank was advised by BofA Securities as exclusive financial advisor and AZB & Partners as legal advisor, the lender said. Shardul Amarchand Mangaldas advised Carlyle and Cyril Amarchand Mangaldas Advent.
In an interview with Business Standard earlier this month, Kumar had said that after keeping the ship stable for two years, YES Bank would focus on growth from this fiscal year, raising about $1 billion through equity.
Then, at a media event, Kumar said fundraising of that magnitude would bring YES Bank’s common equity tier-1 (CET) ratio to 14 percent from 11.5 percent at the moment.
“We need to improve our CET ratio. That would also be a re-evaluation event,” Kumar had said at the event earlier this month.
The announcement of Friday’s capital increase comes after the proposed sale of YES Bank’s bad loans – valued at Rs 48,000 crore – to JC Flowers Asset Reconstruction Company. In the first quarter of the current fiscal year, YES Bank reported a 50.17 percent year-over-year increase in net profit to Rs 310.63 crore from Rs 206.84 crore in the same quarter last year
The private sector lender improved its asset quality, with gross non-performing assets (NPAs) falling to 13.45 percent of gross advances as of June 30, 2022, from 15.60 percent at the end of June 2021. Also net NPAs or bad loans fell to 4.17 percent from 5.78 percent.