Yes Bank to raise US$2 billion via preferential share issue

Yes Bank Ltd. aims to raise up to US$2 billion with the issue of new shares to institutional investors and wealth managers as it soaks up the impact of bad loans in the country's crisis-hit shadow banking and real estate sectors. The plan would see the country's fifth-largest private sector bank by assets seek to sell new stock worth close to its current market cap of US$2.4 billion at the close of trading on Friday.


As a major part of the plan, Yes Bank said it is in talks on a deal to sell shares worth US$1.2 billion to Canadian billionaire Erwin Singh Braich and Hong Kong-based SPGP Holdings.

The bank’s board of directors will meet on December 10 to 'finalise and approve the details of the preferential allotment and convene an extraordinary general meeting subsequently, to obtain the approval of the shareholders.'


This preferential allotment will also be subject to regulatory clearance as approval of RBI is needed to buy a stake of more than 5 per cent in domestic banks. Banking analysts say majority of the funds raised by the bank will be used to provide for bad loans. The lender's gross bad loans as a percentage of total loans spiked to 7.39 per cent in last quarter.