Yes Bank gets $1.2-bn binding offer from global investor; shares zoom 35%

Private lender YES Bank on Thursday said it has received a binding offer from a global investor for an investment of $1.2 billion through fresh issuance of equity shares.

Following the announcement, the shares of YES Bank went up as much as 35 per cent in intraday trading at the time of writing this report.

“The Bank would like to inform that it has now received a binding offer from a global investor for an investment of $1.2 billion in the bank through fresh issuance of equity shares, subject to regulatory approvals as well as bank's board and shareholders approvals”, said the lender in an exchange filing.

“The Bank also continues to be in advanced discussions with other global and domestic investors”, the lender added.

The bank, last month, had said that it had received strong interest from multiple foreign as well as domestic private equity and strategic investors for capital raising, and remains firmly on course to raising growth capital subject to the necessary approvals.

The bank was said to have been in talks with global technology companies to become a strategic investor in the bank.

In August this year, the lender had raised Rs 1,930 crore via qualified institutional placement.

Initially, YES Bank had plans to raise $1 billion. However, that could have entailed a much higher dilution, given the weakness in the lender’s stock price. Shares of the bank are down nearly 80 per cent from their level of nearly Rs 400 a year ago.

YES Bank needs funds to meet Basel-III capital requirements norms, to ensure adequate capital to support growth and expansion. Currently, the bank is just around the minimum regulatory threshold and is in need to replenish. The minimum regulatory requirement is 7.375 per cent till March 2019 and 8 per cent till March 2020.

The bank has seen turbulent times in the past few months and is in the process of cleaning up its books. The private lender reported a huge decline in its June quarter net profit to Rs 114 crore compared to Rs 1,109 crore in the same period last financial year. In the preceding quarter, the bank had a posted a loss of Rs 1,507 crore.

The bank’s growth as well as its Tier-1 capital has been suffering because of higher provisions. The bank provided Rs 3,661 crore in March quarter and Rs 1,784 crore in the June quarter of FY20. The lender is also seeing its slippages rise. The bank has considerable exposure to the struggling NBFC sector and to the Anil Dhirubhai Ambani Group.