Yes Bank Launches QIP Issue Amid Urgent Need For Capital
Private sector lender Yes Bank Ltd. has launched a qualified institutional placement issue to help it meet an urgent need for capital.
In a notification to stock exchanges on Thursday evening, Yes Bank said that the capital raising committee of its board had approved the opening of the QIP issue.
The floor price for issue set at Rs 87.9 per share, the statement said. The bank’s capital raising committee may offer a discount of not more than 5 percent on the floor price, it added.
While the bank did not disclose the amount that it intends to raise, the bank is looking to raise up to $275 million, showed a term sheet for the issue reviewed by BloombergQuint.
Yes Bank, which has seen stressed assets spike, has been in urgent need of capital for the last two quarters.
Its core equity Tier-1 capital ratio fell to 8 percent as of June 30, compared with 8.4 percent in the preceding quarter. The Reserve Bank of India requires banks to maintain a minimum CET-1 ratio of 8 percent by March 2020. As a result of the weak capital position and the rise in stressed assets, rating agencies have downgraded the credit rating of the bank. On July 24, ICRA downgraded the credit rating on close to Rs 32,000 crore worth of Yes Bank bonds.
The bank had first planned to raise capital last year. However, the bank saw an abrupt change in management because of the Reserve Bank of India’s refusal to give founder Chief Executive Officer Rana Kapoor an extension. This delayed the capital raising plans. Ravneet Gill replaced Kapoor as chief executive of the bank earlier this year.
Gill has been attempting to bring in a private equity investor to infuse between $1-1.2 billion into the bank. This, however, is yet to happen. As such a smaller fund raise of $300 million will help tide over the lender till the time a larger capital raise is concluded.