India's Yes Bank seeks up to $2b in preferential new share issue

Ravneet Gill

Ravneet Gill

The stock closed 2.5 per cent lower at 68.3 on the BSE.

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 nearly 12-hour long board meeting that was held on November 29.

As a major part of the plan, Yes Bank said in talks an agreement to sell shares worth $ 1.2 billion to Canadian billionaire Erwin Singh Braich and based in Hong Kong SEI Holdings, which he backs.

Yes Bank said discussions with the investors are expected to be concluded shortly even as a binding term sheet has been extended till December 31.

Others who have shown interest include another family office Citax Holdings and Citax Investment Group, which has proposed to invest $500 million. Besides, a top-tier United States fund house has evinced Interest to invest $120 million.

"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.

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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.

The lender's board has on Friday taken the decision to raise up to $2 billion through preferential allotment at a price in accordance with Chapter V of the SEBI Regulations, 2018.

RBI approval is required for stake purchases in Indian banks of more than 5%.

The banking regulator can allow a "regulated, well diversified and listed/supranational institution/ public sector undertaking/government" to hold up to 40 per cent in a bank.

Yes Bank Ltd (YESB.NS) aims to raise up to $ 2 billion in new shares a big issue to institutional investors and wealth managers since soaks up the impact of bad loans in the banking crisis-hit countries and the shadow of the real estate sector.

The bank said it in a late-night release filed with the exchanges. YES Bank's regulatory capital adequacy ratio (Basel III) stood at 16.3 per cent (CET-I of 8.7 per cent and Tier I of 11.5 per cent) as on September 30, 2019. It has been striving to fund its growth and improve asset quality.

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