Yes Bank, which is India’s fourth-largest private lender, said in a stock exchange filing Friday that several investors had “individually expressed their agreement [or] willingness” to buy shares worth a total of $2 billion. That amount got a green light from the company’s board, which will meet next week to finalize the allotment of shares. No single investor will be allowed to hold more than 25% of the company, the bank said.
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The investors include international asset management funds Discovery Capital and Ward Ferry, along with several family offices. The biggest contribution from an institutional investor — $120 million — will come from a “top tier US fund house,” the company said. It did not identify the institution, adding that the name would be disclosed this week.
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That did little to impress investors, though. Yes Bank shares fell more than 6% in Mumbai on Monday.
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One reason for unease: Only a small portion of the $2 billion commitment “is from well-known funds [or] investors,” analysts at Nomura wrote in a research note Monday.
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They added that while “a large capital raise would address the [on]going concern” for the bank, the company likely still faced a tough path to recovery.
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Yes Bank’s latest results were “significantly weak,” Nomura analysts wrote in a note to clients last month.
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The bank has struggled since its founder and CEO was forced out last year, and its stock has lost most of its value in the last year.
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The bank has also come under increased scrutiny as India tries to clean up its banking sector, which is weighed down by tens of billions of dollars in bad loans.
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— Rishi Iyengar contributed to this report.
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