The bank on Tuesday informed stock exchanges that a board meeting to consider and evaluate the proposal to raise funds through rights issue,
Through preferential allotment, appointment of eligible institutions or through any other permissible mode, subject to regulatory approval.
A formal announcement is due later on Friday evening.
ET first launched Advent and . was reported about Carlyle Is in discussions with Yes Bank for a potential $1 billion investment. On July 22, ET also reported that an announcement is imminent as the banking regulator has cleared the transaction.
Over the past few weeks, top executives from Singapore’s Carlyle, along with the leadership of Advent, have had several meetings with the senior management of Yes Bank and the company’s senior management this week.
,State Bank Of India), the largest shareholder of the private lender, as well as the Reserve Bank of India (reserve Bank of India) to the officials to fix the plan outline, which will be done in phases.
The proposed investment could be similar to Bain Capital’s investment:
The Boston-based private equity firm led the $1.8 billion investment.
Investment will be in the form of issue of fresh shares and warrants to 2 investors. Warrants will be converted into shares in the future based on a pre-agreed strike price and timeline, typically 18 months. If warrants are issued on a preferential basis, as per the rules, the average price of the last six months becomes the basis for the strike price for the warrant. Investors also have to get representation from the board.
An official with knowledge of the matter said, “The quantum of stake and the final amount of investment are being finalized in the meeting held on Friday. The bank is looking to raise up to Rs 10,000 crore.
Advent and Carlyle were not immediately available for comment. Yes Bank’s response regarding this development will be updated soon.
Shares of Yes Bank was trading at Rs 14.88, up 2% on Friday with a market capitalization of Rs 37,281.81 crore on the BSE. The stock has appreciated by 14.5% in the past 1 month in anticipation of the transaction.
Negotiations for the deal have intensified following the proposed sale of the lender’s stressed assets and the formation of a new board. The capital raising is likely to be in stages. After April 2023, the bank will issue another tranche of fresh shares as per the proposal, which is less than the first tranche that both the investors are likely to get by September. Under the Banking Regulation Act, an investor can acquire up to 5% stake in any bank without the approval of RBI.
Even though discussions began at the beginning of the calendar year, the board’s restructuring was a harbinger for new investors to step in. This indicates that the private lender is ready for a turnaround, given the restrictions imposed earlier as part of the reconstruction process. was removed.
RBI had announced earlier last month that Yes Bank would be out of the reconstruction scheme, following which a new board would be formed. This is about eight months ahead of the revival plan’s three-year deadline. For shareholders, however, the ban on trading may not be lifted until March 2023.
Secondly, the proposed sale of Rs 48,000 crore, non-performing asset (NPA) portfolio gave confidence to PE investors down the road and up-and-coming.
Since March 2020, Yes Bank has raised Rs 25,000 crore – including Rs 10,000 crore when SBI and a consortium of private banks invested to keep the bank afloat, and issued a public issue of Rs 15,000 crore was. Its board had on January 21, 2021 approved a proposal to raise Rs 10,000 crore through various modes including Qualified Institutional Placement (QIP) and Foreign Currency Convertible Bonds (FCCBs). However, the bank was not successful in attracting investors. That approval was to expire on February 22, 2022. In late December, the board approved the extension of an earlier proposal to raise capital in the form of equity, bonds, warrants or any other equity-linked security.
Advent, such as Blackstone and Brookfield, were among a handful of private equity investors who discovered purchases in the bank before SBI came to the rescue.