India’s SBI to invest up to $235m in Yes Bank’s follow-on offering

Photo: Reuters

India’s largest lender State Bank of India on Wednesday said its board has approved an investment of up to 1,760 crore in the upcoming follow-on public offer (FPO) of Yes Bank.

“Pursuant to the intimation given by Yes Bank Ltd to the stock exchanges on 07 July 2020 on the issue of raising capital, the executive committee of central board (ECCB) of State Bank of India at its meeting held today 8 July 2020 has accorded approval for a maximum investment of up to 1,760 crore in the further public offering of Yes Bank Ltd,” SBI said in statement to the stock exchanges.

Banks and financial institutions held a 66.94% stake in Yes Bank as on 31 March, showed latest shareholding data available on BSE. Among these, SBI is the largest holder at 48.21%, followed by ICICI Bank at 7.95% and Axis Bank at 4.78%.

On 13 March, the government had approved a rescue plan for Yes Bank backed by SBI. Under the plan, domestic investors including SBI, Housing Development Finance Corp, ICICI Bank, Kotak Mahindra Bank, Bandhan Bank, Federal Bank and IDFC First bank invested 10,000 crore into Yes Bank. In the rescue process, Yes Bank’s AT1 bonds worth 8,415 crore were written down in full in March.

On 7 July, Yes Bank’s board approved raising of capital through a follow-on public offer (FPO). Yes Bank also said that a meeting of the capital raising committee (CRC) is scheduled to be held on or after 10 July, to consider and approve, amongst other things, the price band and discount, if any.

The bank has an enabling resolution to raise up to 15,000 crore this year. Mint reported on 1 July that the bank is preparing for a follow-on public offer (FPO).

The fund raising is critical for Yes bank despite equity infusion worth 10,000 crore by financial institutions and gains worth 6,300 crore from the write down of additional tier I (AT1) bonds. Last month, the Reserve Bank of India (RBI) turned down its request for permission to pay interest on its Tier II bonds due on 29 June. In a regulatory filing on 20 June, the bank said that the interest due and remaining unpaid shall be accumulated and be paid by the bank later, subject to it complying with the regulatory requirement.

Yes Bank’s total capital adequacy ratio stood at 8.5% in the March quarter, of which common equity tier I (CET1) ratio was 6.3% and Tier II ratio was at 2% after a bout of capital infusion from private and public sector lenders.

Prashant Kumar, chief executive of Yes Bank had told Mint in May that it would be desirable to raise the money in the first quarter of FY21. Kumar had said that if the bank raises 15,000 crore, there is no need to come back to market for three years.

Shares of Yes Bank closed at 26.1 on Wednesday, up 1.36% from its previous close.

This article was first published on livemint.com.

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.