YES Bank share surges on plan to raise ₹8,900 cr from Carlyle, Advent

Shares of YES Bank rallied nearly 6% in opening trade on Monday as investors cheered the bank’s plan to raise equity capital of ₹8,900 crore from global private equity investors Carlyle Group and Advent International, with each investor potentially acquiring up to a 10% stake in the private lender. The bank will raise the funds through a combination of about $640 million in shares and about $475 million in share warrants. If the bank successfully completes the fund raise programme, this would be one of the largest private capital garnered by an Indian private sector bank.

YES Bank, which recently came out of the RBI’s reconstruction scheme, proposes 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. The capital raise is subject to shareholders’ approval at the EGM of the bank to be held on August 24, 2022, and relevant regulatory approvals.

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.

“We are extremely pleased to onboard such pedigreed investors like Carlyle and Advent International as our partners, in fulfilling the long-term strategy of the Bank. This is a testimony to the inherent strength of the Bank’s franchise. We are excited about the incremental opportunities that this partnership creates for us and confident that both the investors will play a crucial role in the next growth phase of the Bank,” says Prashant Kumar, MD and CEO of the bank.

Boosted by the development, YES Bank share price gained as much as 5.75% to hit a high of ₹15.8 on the BSE. The bank shares opened higher for the second straight session at ₹15.72, against the previous closing price of ₹14.94. On the volume front, there was a surge in buying as 238 lakh shares changed hands over the counter in the first half an hour of the trade on the BSE, as against a two-week average volume of 289.8 lakh scrips. In comparision, the BSE benchmark Sensex was quoting 190 points, or 0.33%, higher at 57,760 levels at the time of reporting.

The stock has gained 21% in the last one year and 10% in the calendar year on the back of improvement in its profitability and improvement in asset quality. The bank has reported solid financial performance in March and June quarter, thanks to the continued decline in provisions for bad loans.

In the recently concluded June quarter (Q1 FY23), YES Bank reported a 50.17% year-on-year (YoY) rise in profit after tax (PAT) at ₹310.63 crore, compared with ₹206.84 crore in the corresponding quarter last year. Net interest income (NII) for the quarter rose 32% YoY to ₹1,850 crore, while net Interest Margin (NIM) improved by nearly 30 basis points YoY to 2.4%. The bank’s provisions dropped 66% to ₹175 crore for the quarter, supported by lower slippages.

Last month, YES Bank also signed a binding term sheet with JC Flowers ARC for strategic partnership in relation to the sale of identified stressed loans aggregating to nearly ₹48,000 crore.