YES Bank board okays nearly $2 billion fund-raising plan

MUMBAI: Yes Bank said it would raise nearly $2 billion in a share sale with a Canadian billionaire Erwin Singh Braich buying more than half of it or $1.2 billion. The rest will be bought by private equity investors, helping the bank overcome its financial difficulties. The plan is subject to regulatory approvals.

In a late night notice to the stock exchanges the bank said that discussions with Braich are ongoing and will be concluded shortly. The binding term sheet for the deal has been hence extended to December 31.

Other investors include Citax Holdings Ltd & Citax Investment Group will has pledged to invest $500 million. The bank said it will also get $120 million from a top tier US fund house whose name it will disclose early next week.

Among the Indian investors are GMR Group with $50 million, Aditya Birla Family Office $25 million and Rekha Jhunjhunwala with $25 million.

Foreign funds Discovery Capital ($50 mln) and Ward Ferry ($30 mln) make up the rest of the investors.

“In light of the above, the board of directors has today taken a decision to raise upto $ 2 billion through preferential allotment at a price in accordance with Chapter V of the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018 [Higher of 2 weeks or 26 weeks average price]. None of the Investors will be allotted equity shares such that their holding exceeds 25% of the share capital of the bank,” Yes Bank said in the notice.

The bank’s board will meet again ron December 10 to finalise and approve the details of the preferential allotment and convene an extra-ordinary 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. Further, the trading window for dealing in Securities of the Bank shall continue to remain closed for the Designated Persons and for the Connected Persons till December 12, 2019 and hence, they are not permitted to trade in the securities of the bank,” Yes Bank said.

The bank’s shares ended at Rs 68.30 a piece down 2.50% on Friday.

The investor interest for the bank shares is a milestone for Yes Bank which is fighting its way out of trouble under CEO Ravneet Gill after a surge in bad loans and management changes shook investor confidence.

The bank had to provide huge sums for doubtful loans, while corporate frauds in companies such as CG Power and Cox & Kings made the situation worse. Amid this, founder Rana Kapoor who was denied another term as CEO by the RBI last year, lost his stake when lenders sold off his shares for failing to meet payment obligations. Gill was appointed CEO in January and began his three-year term in March.

In an interview with ET earlier this month, CEO Ravneet Gill said that the bank will be able to get in capital before the end of the calendar year.

The bank posted a loss of Rs 600 crore in the September quarter due to a one-off tax hit of Rs 709 crore on account of change in corporate tax rate regime. Excluding this one-time hit, adjusted profit was Rs 109 crore. Gross bad loan ratio rose to 7.4% from 5% at the end of June.

In August, Yes Bank raised $275 million by selling shares to a bunch of domestic investors and foreign portfolio investors, which helped improve its capital adequacy ratio to 8.60% from 8% in June.