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Home / Industry / Banking /  Carlyle, Advent to put   8,898 cr in Yes Bank
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MUMBAI : Yes Bank Ltd on Friday said its board has approved raising 8,898 crore ($1.1 billion) by selling shares and warrants to private equity investors Carlyle Group and Advent International, a move that would bolster the private lender’s capital position.

These investments would give Carlyle and Advent up to 10% each in the bank, post-conversion of warrants into shares. The capital raise, one of the largest by a domestic private lender, is subject to shareholders’ approval at the extraordinary general meeting on 24 August and relevant regulatory and statutory approvals, the bank said in a statement.

The decision brings to end negotiations that have been on for months and reportedly took longer than expected over delays in the bank’s plan to find a partner to offload its pile of toxic assets. Earlier this month, it selected JC Flowers as the joint venture partner to buy stressed loans of 48,000 crore.

On Friday, Yes Bank said shares and warrants would be allotted to CA Basque Investments—part of the group of entities doing business globally as the Carlyle Group; and to Verventa Holdings Ltd, an affiliate of funds advised and managed by Advent.

The bank would sell up to 3.69 billion shares at 13.78 per share, aggregating up to 5,093.3 crore to the PE firms. In addition, Yes Bank would issue as many as 2.56 billion warrants at 14.82 per warrant, aggregating up to 3,805.16 crore.

Analysts said the deal looks positive as it will provide a much-needed boost to the long-term viability of the bank.

“It was very important at this juncture as lock-in period for share allotted or frozen as part of the Yes Bank bailout is coming to an end in next few months," said Asutosh Mishra, head of research, Ashika Stock Broking.

Yes Bank shares on the BSE rose 2.47% to 14.94 on Friday.

The bank said 25% of the price of every warrant would have to be paid at the time of allotment, while the balance 75% needs to be paid at the time of issue and allotment of the shares on exercising the option. The warrants, Yes Bank said, are exercisable in one or more tranches after 1 April 2023 but not later than 15 days before the expiry of 18 months from the date of the allotment of the warrants. Each warrant is exchangeable into one share. Both investors will have the right to nominate a non-executive, non-retiring nominee director, each on the bank’s board.

“This is a testimony to the inherent strength of the bank’s franchise," said Prashant Kumar, managing director and chief executive of Yes Bank.

In a separate statement, Advent said the stake would be its first investment in a bank in India. The private equity firm has been investing in India since 2007 and has invested or committed almost $2.9 billion across 13 companies in sectors such as financial services, consumer products, healthcare, industrial and technology.

Meanwhile, in another statement, global investment firm Carlyle said it 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. Carlyle said it has been investing in India for over two decades and has invested approximately $5.5 billion of equity in more than 40 transactions in the country as of 30 June.

That apart, Yes Bank’s board has also approved increasing the lender’s authorized share capital from 6,200 crore to 8,200 crore.

As of 30 June, the private lender’s total capital adequacy ratio stood at 17.7%, up 30 basis points (bps) from the March quarter. On 21 June, Mint reported that the bank is in advanced stages of closing a $1 billion equity fundraising from private equity firms Carlyle and Advent International, citing two people aware of the development. The proposed investments would aid Yes Bank in its target of achieving a 15% growth in credit in the current fiscal and defend its balance sheet against the current macro volatility.

Gopika Gopakumar contributed to the story.

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