Yes Bank To Raise Over $1 Billion From Carlyle And Advent

Private sector lender Yes Bank Ltd. said that it will raise Rs 8,898.47 crore (approximately $1.11 billion) from private equity firms Carlyle Group and Advent International. The bank's board met on Friday to assess the investment proposals and approved them.

To facilitate this investment, the bank has also increased its authorised share capital from Rs 6,200 crore to Rs 8,200 crore, it said in an exchange notification.

The investment will be through issuance of equity shares and share warrants, the bank said.

Yes Bank will issue 369 crore equity shares at a price of Rs 13.78 per share and 256 crore share warrants at Rs 14.82 per warrant, cumulatively. Carlyle Group and Advent International will be issued 184.80 crore equity shares and 128.37 crore warrants, each.

Post issuance of equity shares, the two investors will hold 5.9% equity stake in Yes Bank, each. After the warrants are converted to equity shares, the two investors will hold 10% each.

Under this transaction, 25% of the warrant price will be paid when they are issued, while the rest will be paid when the bank issues equity shares in exchange for the warrants.

The issuance of shares and warrants is subject to approval of the shareholders of the bank, regulatory authorities including Reserve Bank of India and Competition Commission of India, the bank said.

In a separate statement, Carlyle Group said it will have one nominee on the Yes Bank board after the transaction is concluded.

"Carlyle is looking to draw on its well-established experience in the financial services sector in India and across Asia to support Yes Bank in further growing its retail and transaction banking, and digital payments platforms," the private equity fund said in its statement.

Yes Bank had last raised Rs 15,000 crore from a clutch of investors through a follow-on public offer in July 2020, just months after the bank was put under a reconstruction process by the Reserve Bank of India in March 2020.

India's largest lender State Bank of India is currently the biggest shareholder in Yes Bank, with a 30% stake. Under the reconstruction scheme, approved in March 2020, all shareholders having more than 100 shares of the bank were subjected to a three-year lock-in period, wherein they had to hold on to 75% of their holding for this period. This lock-in period ends in March 2023.

As of June 30, the bank's capital adequacy ratio stood at 17.7%, which included a common equity Tier-1 capital ratio of 11.9%. The bank reported a net profit of Rs 311 crore during the first quarter, with a gross non-performing asset ratio of 13.4%.

The lender is also in the process of offloading its bad loans through a transaction with an asset reconstruction company. It has signed a binding term sheet with JC Flowers Asset Reconstruction Co. to sell Rs 48,000 crore worth of stressed assets. The sale is subject to a Swiss Challenge auction, where other ARCs will be allowed to place a competitive offer.

BQ Prime had reported on Monday that ARCION ARC and Asset Reconstruction Company of India Ltd. had shown interest to participate in the auction.

Once the sale of the stressed assets is concluded, Yes Bank's gross NPA ratio will drop to around 2%, the bank's Chief Executive Officer Prashant Kumar had previously said.