YES Bank shares surge nearly 6% on plans to raise over $1 billion

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YES Bank will raise $1.1 billion from Carlyle and Advent International
The bank plans to raise Rs 5,100 crore by selling preferential shares and convertible warrants
Both private equity investors will own up to 10% of the Yes Bank

Written By:Yash

Updated: July 31 2022 08:24:22 PM ET

YES Bank shares rose 5.75% to Rs 15.8 on Monday after the bank disclosed last Friday that it will raise $1.1 billion from two private equity investors, Carlyle and Advent International.

YES Bank said in an exchange filing that it plans to raise roughly Rs 5,100 crore by selling 370 crore preferential shares to Advent and Carlyle at Rs 13.78 apiece and the remainder through 257 crore convertible warrants at Rs 14.8 apiece.

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Following the completion of the transaction, both private equity investors will own up to 10% of the private sector lender.

The fresh funds will be a big relief after a year of trying to raise money. According to YES Bank’s management, the fresh capital would most likely be used to fuel the bank’s expansion in line with its rivals.

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YES Bank has recently completed an agreement to establish an asset reconstruction (ARC) arm, which would allow it to shift the majority of its bad assets to the ARC, potentially freeing up additional resources to pursue expansion.

YES Bank’s asset quality has steadily improved in recent quarters, with the net non-performing assets ratio falling to 4.17% in the June quarter from 4.53% the previous quarter.

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For the Q1 FY22-23, the bank reported a 50.17% year-on-year (YoY) rise in profit after tax (PAT) at Rs 310.63 crore compared with Rs 206.84 crore in the same quarter last year.

Net interest income (NII) for the quarter increased 32% year on year to Rs 1,850 crore, according to a BSE filing. Net Interest Margin (NIM) was 2.4% for the quarter, up roughly 30 basis points year on year.

On the BSE at 11:10 a.m., YES Bank shares were down 1% at Rs 14.79. The stock has gained by 4.53% in the previous two days and has outperformed the sector by 1.53%.