Mumbai: Yes Bank is looking at expanding its capital base by over 10 per cent through the issue of fresh equity under the private placement route.
The bank is looking to bring in a new investor with over 5 per cent stake and a board seat which will require the approval of the RBI.US private equity giant TPG, Advent International and a couple of sovereign wealth funds are in discussions to buy into the Indian private bank, which has seen its market value halve since March, a slide prompted by a spate of bad loan exposures.
Yes Bank board had already approved a $1-billion equity capital raising even as its market capitalisation hovers around $5 billion, or over Rs 32,000 crore.The bank is looking at doing a repeat of what Axis Bank did in 2017 by raising close to Rs 11,626 crore by selling shares to investors, including Bain Capital and Life Insurance Corporation (LIC).
Bain had formed a consortium with its global sponsors, which are mostly sovereign wealth and pension funds.Any private equity investor coming into Yes Bank too is expected to follow a similar path.
Yes Bank has had discussions with other bulge bracket investors like Blackstone and KKR too, with some of them seeking well in excess of 10 per cent holding and a role in steering it.
The RBI typically allows investors to hold only 5 per cent but does make exceptions.Sources said that the capital raising would serve two purposes.
First, it will act as confidence capital by raising the capital adequacy ratio (currently at 16.5 per cent) much above statutory requirement.
Second, the presence of a global investor on the board would reassure investors on governance.
The bank is understood to have told investors that it would continue to focus on corporate banking but would shift from structured products to cashflow based financing.The bank had reported that its watch list of stressed assets was Rs 10,000 crore.