YES Bank gains 4% on completion of sale of NPA worth ₹48,000 cr

Shares of YES Bank soared over 4% in intraday trade on Monday after the private lender concluded the sale of ₹48,000 crore stressed asset loan portfolio to JC Flowers Asset Reconstruction company. YES Bank recently announced JC Flowers ARC emerged as the winner of the Swiss Challenge process for the sale of its portfolio of stressed assets.

“Pursuant to the earlier decision of the bank to declare JC Flowers Asset Reconstruction Private Limited as the winner of the Swiss Challenge process, the bank has now concluded assignment of identified stressed loan portfolio of the bank aggregating to up to ₹48,000 crores as on March 31, 2022 under 15:85 structure, after adjusting recoveries between 1st April 2022 to 30th November 2022,” YES Bank said in an exchange filing on December 17.

Boosted by the development, shares of YES Bank opened a tad higher, in sync with the broader market, and gained as much as 4.2% to hit an intraday high of ₹22.1, against the previous closing price of ₹21.2 on the BSE. In comparison, the BSE Sensex gained as much as 366 points to 61,704 levels during the session so far.

The stock price of YES Bank has nearly doubled in the last nine months, from its 52-week low of ₹12.11 on March 30, to ₹22.1 today. Last week, on December 14, the private lender touched a 52-week high of ₹24.75. The banking stock has risen 63% in the last one year, 72% in six months, and 27% in a month as compared to gain of 22%, 30%, and 1.5%, respectively, in the BSE bankex index.

In June this year, the private lender decided that the JC Flowers ARC would be the base bidder for a proposed sale of an identified stressed loan portfolio of the bank. Under the Swiss Challenge method of bidding, the highest bid placed in the first round of auction becomes the base price for other bidders before the second round of auction.

In recent times, investors have turned bullish on YES Bank amid a slew of positive developments and improvements in its financial performance. Earlier this month, the Reserve Bank of India gave conditional approval to private equity investors Carlyle Group and Advent International to acquire up to 9.99% each in the private lender. The proposed investment will be done by CA Basque investments, a part of The Carlyle Group and Verventa Holdings Limited, an affiliate of funds managed by Advent.

In July this year, YES Bank announced to raise equity capital of ₹8,900 crore from these global private equity investors. The bank proposed to raise the funds through a combination of about $640 million in shares and about $475 million in share warrants. The bank plans to issue 3.70 crore equity shares on a preferential basis at a price of ₹13.78 per share and 257 crore warrants convertible into equity shares at a price of ₹14.82 per warrant, adding ₹8,900 to the equity capital base of the bank. If the bank successfully completes the fundraise program, this would be one of the largest private capital garnered by an Indian private sector bank.

As per the bank, the capital raise will further bolster its capital adequacy and aid its medium to long term sustainable growth objectives. The net worth of the bank would scale to ₹43,000 crore from ₹34,100 crore and CET-1 capital to ₹36,100 crore.