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Global PE investors Advent, Carlyle to invest Rs 8,900 cr in YES Bank

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Private lender YES Bank on Friday announced raising equity capital worth $1.1 billion (Rs 8,900 crore) through funds affiliated with global private equity investors Carlyle and Advent International. Each investor will potentially acquire up to 10 per cent stake, YES Bank said in a filing to the exchanges.

“This will be raised through a combination of $640 million (Rs 5,100 crore) in equity shares and $475 million (Rs 3,800 crore) through equity share warrants,” YES Bank said.

The private sector lender has proposed to issue 3.7 billion equity shares on a preferential basis at a price of Rs 13.78 per share and 2.57 billion warrants, convertible into equity shares, at a price of Rs 14.82 per warrant. This will add Rs 8,900 crore to the equity capital base, YES Bank said.

On Friday, YES Bank shares closed at Rs 14.94, up 2.47% from its previous close on the BSE.

“The capital raise will further bolster the capital adequacy of YES Bank and aid the bank’s medium to long term sustainable growth objectives. Once approved, this would be one of the largest private capital raises by an Indian Private Sector Bank,” the lender said.

The fund-raising plan is subject to shareholders approval at the Extraordinary General Meeting of YES Bank, to be held on August 24.

“We are extremely pleased to on-board such pedigreed investors like Carlyle and Advent International as our partners, in fulfilling the long-term strategy of the Bank. This is a testimony to the inherent strength of the Bank’s franchise,” Prashant Kumar, Managing Director & Chief Executive Officer, YES Bank said.

“We are excited about the incremental opportunities that this partnership creates for us and confident that both the investors will play a crucial role in the next growth phase of the Bank,” Kumar said.

YES Bank was advised by BofA Securities as an exclusive financial adviser and AZB & Partners as a legal advisor, the lender said.

Carlyle was advised by Shardul Amarchand Mangaldas and Advent was advised by Cyril Amarchand Mangaldas for the deal.

In an interview with Business Standard earlier this month, Kumar had said that after steadying the ship for two years, YES Bank would now focus on growing business from the current financial year and would raise around $1 billion through equity capital.

Subsequently, Kumar said at a media event that fund raising of that magnitude would take YES Bank’s common equity tier-1 (CET) ratio to 14 per cent from 11.5 per cent at present.

“We need to improve our CET ratio. That would also be a re-rating event,” Kumar had said at the event earlier this month.

Friday’s capital raising announcement comes after the proposed sale of YES Bank’s bad loans – worth Rs 48,000 crore – to JC Flowers Asset Reconstruction Company.

In the first quarter of the current financial year, YES Bank reported a 50.17 per cent year-on-year rise in net profit at Rs 310.63 crore as against Rs 206.84 crore in the same quarter last year

The private sector lender improved its asset quality, with gross non-performing assets (NPAs) falling to 13.45 per cent of gross advances as of June 30, 2022 from 15.60 per cent by June-end 2021. Net NPAs or bad loans too came down to 4.17 per cent from 5.78 per cent.

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