YES Bank looks to raise up to Rs 10,000 crore equity capital

Private lender YES Bank is looking to raise equity capital to the tune of up to Rs 10,000 crore by selling shares through a qualified institutions placement (QIP) or in international markets through global depository receipts, American depository receipts, foreign currency convertible bonds, or other instruments, the lender said in a notification to the London Stock Exchange.

The capital raise is to further strengthen its common equity tier-1 (CET-1) ratio, ensure there is capital to support growth, and maintain adequate buffers to deal with any unforeseen impact from a position of strength. As of December, the private lender had a capital adequacy ratio of 17.7 per cent, with a CET-1 ratio of 11.6 per cent.

Interestingly, there were reports that private equity groups such as Carlyle and Advent International are looking at a significant investment in the bank. Last year, the bank’s board had given its nod for a capital raising plan, which was to lapse in February 2022.

On capital raising plans, Prashant Kumar, YES Bank’s managing director and chief executive officer, had said in an analyst call after the Q3 earnings, “We have been able to add 40 basis point on our CET-1 but definitely for the growth purposes we would continuously evaluate and whenever like there will be a right opportunity, we would go to the market for the purpose of growth capital.”

The lender had undergone a reconstruction scheme in March 2020 and had raised Rs 10,000 crore from State Bank of India and seven domestic financial institutions. Further, within four months of the reconstruction, the bank had also raised Rs 15,000 crore through a follow-on public offer (FPO) in July 2020.

At present, domestic financial institutions, including State Bank of India (SBI) hold 38.27 per cent stake in the bank. Life Insurance Corporation (LIC), one of the biggest institutional investors, holds 4.99 per cent stake in the bank.