YES Bank to raise $500 mn via share sale

Private sector lender YES Bank is set to raise $500 million by issuing fresh shares to a cluster of investors. This will lead to dilution of 10-12 per cent in promoter shareholding.

Officials involved in the qualified institutional placement (QIP) said the bank would sell shares at Rs 540-550/share. Goldman Sachs, Deutsche Bank, UBS, HSBC, JM Financial and Motilal Oswal Financial Services are the lead arrangers for the issue.

On Thursday, the YES Bank stock closed at Rs 549.9 on BSE, down 1.99 per cent.

Currently, Rana Kapoor, and Madhu Kapur and her family are the company’s largest individual promoters; while Kapoor owns 5.55 per cent, Madhu Kapur and her family own 9.74 per cent.

YES Capital and Morgan Credits, owned by Kapoor’s wife and daughter, hold 4.19 per cent and 3.9 per cent, respectively. Kapur’s shareholding company, Mags Finvest, holds 2.17 per cent

As of now, promoters hold 25.55 per cent in the bank. Reserve Bank of India norms cap promoter holding in private sector banks at 10 per cent. Most banks have given the central bank a road map on plans to dilute promoter stake.

However, an RBI-appointed committee, headed by former Axis Bank chairman P J Nayak, has recommended promoters of private banks be allowed to hold 25 per cent stake. The new norms on bank licences had capped promoter shareholding at 15 per cent.

In its annual report, released on Thursday, YES Bank said it planned to raise $500 million by different modes. “The bank proposes to raise additional capital aggregating up to $500 million or its rupee equivalent by way of placement of shares to qualified institutional buyers through QIP and/or private placement in international markets through ADRs (American depositary receipts)/GDRs (global depositary receipts) or foreign currency convertible bonds or issue of fully-convertible debentures/partly-convertible debentures, preference shares convertible into equity shares, and/or any other financial instruments or securities convertible into equity share.”

The bank had said it needed to raise further capital to support its growth plans; it would also need incremental capital to address additional capital requirements under Basel-III norms. As of March-end, that bank’s capital adequacy ratio was 14.4 per cent, according to Basel-III norms, of which tier-I capital was 9.8 per cent.

In January 2010, the bank had raised Rs 1,033.87 crore through the QIP route. In December 2006 and December 2007, the bank had raised Rs 120 crore and Rs 330.75 crore, respectively, through private placements.