- Both the entities are said to buy 49% stakes in YES Bank.
- SBI is said to invest some ₹2450 crores in YES Bank which can later go up to ₹10,000 crores depending on the due diligence and final valuation.
After high hopes of SBI Credit card IPO, both the entities – SBI & LIC are set to acquire 49% stakes in YES Bank. SBI will likely be given exemption from the open offer. A similar exemption was given to the lender in the case of Union Bank of India last year in November.
By this news, share prices of the 3 entities jumped 25.77% to close at ₹36.85 on the Bombay Stock Exchange.
“We will abide by the timelines under Regulation 30 of SEBI (LODR) Regulation 2015 in disclosing the developments if any in the matter to stock exchanges.” – SBI’s clarification of the stock exchange. (Source)
Before SBI & LIC decided to buy stakes in YES Bank, it tried to reach out to a number of mutual fund providers for raising fresh equity capital worth $300-500 million. The private bank had plans to raise around $2 billion to boost its capital base.
SBI & LIC are most likely to pick up 24.5% stakes each in YES Bank. Both the entities are said to appoint a new managing director and get board control of the bank.
The move is said to be mandate one and central bank’s lack of confidence in whether the private bank will by itself manage to attract external investors on its own before 14th March.
The deal is said to be around ₹490 crores but the amount is not fixed. So far, YES Bank failed to attract any strategic investor which is why 2 government entities SBI & LIC are stepping forward to save the private bank.
According to the reconstruction scheme, YES Bank’s authorized capital will be increased to ₹5,000 crores from ₹600 crores and paid-up capital will be enhanced to ₹4800 crores. This is said to be effective from the day the government notifies the scheme in Gazette.
YES Bank earlier delayed its Q3 earning as it was reviewing a non-binding expression of interest from 4 investors – Cantor Fitzgerald, Deutsche Bank global co-CEO Anshu Jain, and local investment bank IDFC Securities and Amit Capital to raise funds that would help YES Bank to expand its loan.
Recently, YES Bank received non-binding expressions of interest from investors including JC Flowers, Tilden Park Capital, OHA UK, and Silver Point Capital.
Currently, there are 2.55 billion fully paid-up shares issued, totaling ₹510 crores. SBI’s investment in YES Bank in the short-term will be ₹2,450 crores.
SBI & LIC the duo is set to buy stakes in the YES Bank but then for how many more instances government entities will emerge to save a private entity?
While the deal is yet to happen, a media report last month revealed that Hinduja Group was partnering with private equity firm Cerberus Capital Management LP to revive YES Bank.