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Advent and Carlyle will invest Rs. 8,900 crores in YES Bank

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The fundraising strategy is contingent on shareholder approval at the August 24 extraordinary general meeting.

Private lender YES Bank stated on Friday that it has raised $1.1 billion (Rs 8,900 crore) in equity capital from entities linked with global private equity investors Carlyle and Advent International. Each investor may acquire up to 10%, according to a YES Bank document.

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

YES Bank
YES Bank

Friday’s closing price for YES Bank shares on the BSE was Rs 14.94, up 2.47% from the previous day’s finish.

“The capital increase would further strengthen YES Bank’s capital adequacy and support the bank’s medium- to long-term goals for sustainable growth. Once approved, this will be one of the largest private capital increases by an Indian private sector bank, according to the statement.

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The intention to raise funds is contingent on shareholder approval at the August 24 extraordinary general meeting.

“We are ecstatic to have Carlyle and Advent International on board as our partners in executing the bank’s long-term plan. This demonstrates the fundamental strength of the bank’s brand, said managing director and chief executive officer, Prashant Kumar.

Kumar stated, “We are delighted about the additional prospects that this relationship affords us and are convinced that both investors will play a vital role in the bank’s next growth phase.”

Additionally, YES Bank’s first-quarter earnings rose 50.2% to Rs 311 crore due to better interest margins.

According to the lender, YES Bank was advised by BofA Securities as its exclusive financial advisor and AZB & Partners as its legal advisor. Shardul Amarchand Mangaldas advised Carlyle, while his brother Cyril advised Advent.

YES Bank
YES Bank

In an interview with Business Standard earlier this month, Kumar stated that after two years of stabilization, YES Bank would now focus on business expansion and obtain approximately $1 billion in equity capital.

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Subsequently, Kumar stated at a media gathering that such a fund raising will increase YES Bank’s common equity tier-1 (CET) ratio to 14% from its current 11.55%.

“We must increase our CET ratio. That would also constitute a re-rating,” Kumar had stated at the occasion earlier this month.

The capital raising announcement made on Friday follows the proposed sale of Rs 48 trillion worth of bad loans from YES Bank to JC Flowers Asset Reconstruction Company. In the first quarter of the current fiscal year, YES Bank’s net profit increased by 50.17% year-over-year to Rs 310.63 crore from Rs 206.84 crore in the same quarter of the previous fiscal year.

The private sector lender improved its asset quality, with gross non-performing assets (NPAs) falling from 15.60% of gross advances at the end of June 2021 to 13.45% of gross advances as of June 30, 2022. Net nonperforming assets or bad loans decreased to 4.17% from 5.78%.

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