Yes Bank board decides to raise up to $ 2 bn via preferential allotment – Livemint, Livemint.com

Yes Bank said on Friday eight global and domestic investors have shown interest in pumping in $ 2 billion in the bank.

The lender’s board has on Friday taken the decision to raise up to $ 2 billion through preferential allotment at a price in accordance with Chapter V of the SEBI Regulations, 2018.

The board shall reconvene on 10 December to finalize and approve the details of the allotment and convene an extraordinary general meeting subsequently, to obtain the approval of the shareholders.

Among institutional investors, a “top tier US fund house”, Discovery Capital and Ward Ferry express willingness to subscribe to equity shares of the bank. The name of the fund house will be disclosed early next week.

Among family offices, Aditya Birla Family Office, Citax Holdings Ltd & Citax Investment Group, GMR Group and Associates, Erwin Singh Braich / SPGP Holdings , Rekha Jhunjhunwala express willingness to subscribe to equity shares of the bank.

Of the eight investors, the family office of Canadian industrialist Erwin Singh Braich and the Hong-Kong based SPGP Holdings, which is backed by Braich, has sought to purchase equity shares worth $ 1.2 billion. With regard to interest from Erwin Singh Braich / SPGP Holdings, the bank said in its regulatory filing that “discussions with investor ongoing and expected to be concluded shortly. In the meantime, the Binding Term Sheet extended till 31 December, 2019 “. Braich is the founder of the Braich Group of Companies and Trusts.

Also, the Singapore-based Citax Holdings Ltd & Citax Investment Group have expressed interest in purchasing equity shares worth $ 500 million in the bank, while the undisclosed American “fund house” is willing to purchase $ 120 million worth of equity shares.

Aditya Birla Family Office and Rekha Jhunjhunwala, wife of stock market investor Rakesh Jhunjhunwala, have committed $ 25 million each, the bank said.

None of the investors will be allotted equity shares such that their holding exceeds 25% of the share capital of the bank.

RBI approval is required for stake purchases in Indian banks of more than 5%. Any non-financial entity can buy up to 10% of a lender, and for a financial entity the cap is 15%. In general the central bank is reluctant to allow larger stakes, though there’s a provision to allow a single investor to pick up 40% or more under special circumstances.

With exposure to several troubled shadow banks, real estate firms and stressed companies, Yes Bank’s bad loans have risen sharply, forcing it to step up provisioning and eroding its capital. The lender’s core equity capital is 8.7%, barely above the regulatory minimum of about 8%.

Recently, the lender offloaded more than 47 lakh shares of Reliance Capital, worth nearly₹8 crore, in three consecutive days of selling.

With₹31, 400 crore ($ 4.4 billion) of exposure to junk-rated companies, the bank might need more capital to set aside for defaults in the future.

With inputs from Bloomberg