- Shares in Yes Bank closed on Monday at Rs. 63, 77 percent below trading levels
- Paytm is also in discussions to buy a stake in Yes Bank from co-founder Rana Kapoor
- Earlier in August, the bank raised nearly $275 million via qualified institutional placement (QIP)
Yes Bank is looking forward to securing a deal to sell its minority stake to a global technology company to help boost the Indian private lender’s capital, Mr. Ravneet Gill, the bank’s CEO said. Gill also said the stake sale was set to be less than 10 percent initially but could rise, describing the buyer as one of the world’s top three technology companies that had not previously invested in a bank. He did not name the investor. Well, under central bank rules, an individual shareholder cannot hold more than 15 percent in a bank.
In another news, it has also come in light that Paytm, India’s digital payments major, is in discussions to buy a stake in Yes Bank from co-founder Rana Kapoor.
Yes Bank’s CEO has also said that
We are in a fairly advanced level of talks right now and it is close to being a done deal.”
The board has already signaled a green flag to the country’s fourth-largest private lender to go ahead to raise more growth capital. The bank has thus given the approval to raise $1.3 billion but aims to bring in an additional $1 billion to $1.2 billion via a preferential allotment.
This comes after shares in Yes Bank closed on Monday at Rs. 63, 77 percent below trading levels at the start of the financial year on April 1.
Yes Bank’s common equity tier 1 capital at the end of June stood at 8 percent, marginally above the regulatory requirement of 7.375 percent. After the QIP, the ratio improved to 8.6 percent.
The bank said that the tech investment would help restore investor confidence in the stock. In addition to the major tech investor, smaller investors could also pump in about $200 million to $250 million, Mr. Gill said.
There are two very large Indian family offices, there is a European and an American private equity firm that have expressed interest,” Mr. Gill added.
Earlier in August, the bank has already raised nearly $275 million via qualified institutional placement (QIP), a capital-raising tool commonly used in India, to improve its capital adequacy ratio. Gross non-performing loans as a percentage of total loans spiked to 5.01 percent at the end of June, weighing on the lender.
Hope the stake sale is able to pump in some liquid for the country’s fourth major largest private lender to mend its things.