Mumbai: Private sector lender Yes Bank has received offers of $3 billion from potential investors, including the recently-announced $1.2 billion from a North American family office, said Ravneet Gill, chief executive of the bank.
Speaking to a small group of reporters late on Friday evening, Gill said that the bank has non-binding offers from two domestic mutual funds, six global private equity firms, two Indian financial investors and two Indian family offices. While the two domestic MFs and global PE firms have made an offer of $1.5 billion, the offer from four Indian investors is about $350 million.
“The new investor would own around 30-33% of Yes Bank for $1.2 billion," said Gill, adding that according to the term sheet, the offer price will be under Securities and Exchange Board of India’s (SEBI) two-week formula or any mutually-agreed price. The investor has also sought one board seat and will be a "pure financial investor" and has not sought promoter status.
Under this formula, the share price for a qualified institutional placement (QIP) is the average of the weekly high and low of the closing prices of the shares during the two weeks preceding the issue.
The North American family office, Gill said, has invested in financial services companies as well as energy assets in other parts of the world but has not invested in India. It is a multi-billion entity. That apart, its term sheet also includes a letter from a “large US-based financial institution" saying that the investor has the ability to take the deal forward.
“We are looking at every single offer with an open mind," said Gill.
Gill cited legal opinion taken by the bank to say that the investor, despite buying 30-33% stake, would not require to do an open offer as its voting rights would be capped at 15% (under RBI guidelines).
The bank’s capital raising committee will look at the offers when they meet next. The meeting, he said, could happen as early as next week and the bank hopes to close the fund-raise before December.
Gill, who received the email from this investor (with $1.2 billion offer) in the early hours of Thursday, said he sought legal opinion on the term sheet and also communicated it to market regulator Sebi and the Reserve Bank of India (RBI). He said that it was disclosed to the exchanges because it contained information was price sensitive.
“The bank also informed RBI via telephone and has sent a copy of the document via email," said Gill.
He said that following the proposed capital infusion, the bank would not require capital for the next two years, growing at a high-teen rate. The bank which reported a common equity tier 1 (CET1) ratio of 8.7% in the September quarter of FY19 will see an around 260 basis point (bps) jump in capital adequacy ratio following the proposed infusion.
Shares of Yes Bank on BSE closed at ₹66.6 on Friday, down 5.46% from its previous close. On Thursday, Yes Bank’s shares, which soared after its exchange filing, ceded some gains later to close the day 24% higher at ₹70.45.
On Friday, Yes Bank reported a net loss of ₹600 crore for the three months to September primarily owing to a one-time deferred-tax asset (DTA) adjustment of ₹709 crore. The bank had posted a net profit of ₹965 crore in the same period last year. The bank’s loss was higher than ₹402 crore estimated by a Bloomberg consensus estimate of 17 analysts. Even without DTA adjustment, the bank’s operating performance was weaker than the same period last year. Yes Bank’s operating profit was also down 38% year-on-year (y-o-y) to ₹1,458 crore in the quarter under review.