YES Bank expands equity offer to $2 billion; board to meet on December 10

Board of directors held marathon meeting which lasted over eight hours

Private sector lender YES Bank has increased the size of its equity capital offer to $2 billion from the earlier guidance of $1.2 billion on “strong interest” shown by NRI investors, including a $1.2 billion offer by Erwin Singh Braich and SPGP Holdings, and $500 million by Citax Holdings and Citax Investment Group, according to the bank. 

Other prominent suitors are the Aditya Birla Family Office ($25 million), GMR Group and Associates ($50 million), and Rekha Jhunjhunwala ($25 million). Besides, a top-tier US fund house has evinced Interest to invest $120 million. Its name will be disclosed early next week. Discovery Capital will take $50 million and Ward Ferry will take $30 million.

Meanwhile, the bank has extended the deadline for the binding term sheet for Erwin Singh Braich and SPGP Holdings to December 31 from November 30.

The bank’s board of directors on Friday held a marathon meeting, which lasted over eight hours. The bank in a late night communication to the stock exchanges said investors had individually expressed their willingness to subscribe to the equity shares of the bank for an aggregate amount of $2 billion. These shares will be issued on a preferential allotment basis.

None of the Investors will be allotted equity shares such that their holding exceeds 25 per cent of the share capital of the bank.

The board of directors shall reconvene on December 10 to finalise and approve the details of the preferential allotment. It will also convene an extraordinary general meeting subsequently to obtain the approval of the shareholders.

Such preferential allotment shall be subject to receipt of all regulatory and statutory approvals, as may be applicable, the bank said. YES Bank’s regulatory capital adequacy ratio (Basel III) stood at 16.3 per cent (CET-I of 8.7 per cent and Tier I of 11.5 per cent) as on September 30, 2019. The stock closed 2.5 per cent lower at 68.3 on the BSE.

Banking on the deal 

• 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%
• There’s a provision to allow a single investor to pick up 40% or more under special circumstances
• YES Bank’s core equity capital is 8.70%, barely above the regulatory minimum of about 8%