Yes Bank will convene an extraordinary general meeting on August 24 to seek shareholders’ approval for the proposed capital infusion of Rs 8,900 crore by US-based private equity investors Carlyle and Advent.
The country’s sixth largest private sector bank based on total assets size said it is witnessing a significant momentum across its business segments. Potential and favourable tailwinds are seen for credit growth in India coupled by investments made by the lender, according to a regulatory filing.
“The bank is well poised to capitalise on the growth opportunities and further enhance its positioning in the India banking space,” it added.
It proposes to raise the capital through a combination of Rs 5,100 crore (about USD 640 million) in equity shares and Rs 3,800 crore (USD 475 million) through equity share warrants from funds affiliated with Carlyle and Advent International. Each of these investors would potentially acquire up to 10 per cent stake in the bank.
The lender would convene an Extraordinary General Meeting (EGM) on August 24 to seek shareholders’ nod for various proposals, including for the fund raise plan.
“… approval of the members of the bank is being sought by way of a special resolution for issue of investor equity shares and investor warrants, on a preferential basis,” it said in the regulatory filing on Tuesday.
The capital raise proposal is also subject to the relevant regulatory/statutory approvals.
On March 5, 2020, the government basis RBI’s recommendation had put a moratorium on the bank and later notified Yes Bank Reconstruction Scheme, 2020 (Reconstruction Scheme) due to its financial position and governance issues.
The scheme witnessed eight Indian financial institutions led by State Bank of India (SBI) infusing Rs 10,000 crore by way of equity into Yes Bank. Subsequently in July that year, the bank successfully raised Rs 15,000 crore through one of the largest Follow on Public Offers (FPOs).
Yes Bank, which has now come out of the reconstruction scheme under the new management, delivered a full year profitability in fiscal year ended March 2022.
According to the regulatory filing, the bank has not only stabilised but has also delivered balance sheet growth, asset quality improvement and capital base strengthening.
Bank’s current Common Equity Tier 1 (CET 1) capital is at 11.9 per cent (including profits), which is well above the minimum regulatory requirement of 8 per cent. But it is still below the CET 1 levels maintained by other top private sector banks at 15-20 per cent, as per the regulatory filing.
Even as the current capital base may be reasonable for base case growth/risk scenario, the bank said it believes the business would need incremental growth capital to sustain high growth momentum over the coming years.
“Lastly, the evolving macro-economic conditions further impacted by geo-political considerations have made it prudent for banks to maintain higher levels of capital,” it added.
The bank would also seek shareholders’ approval for appointment of Prashant Kumar as regular MD & CEO for three years.
Yes Bank’s board, on July 15, 2022, had approved the appointment of Kumar as the interim MD & CEO for three months or till a regular MD & CEO was appointed.
He was the MD & CEO of the bank with effect from March 26, 2020 till July 15, 2022. Prior to that, he was the administrator of the bank from March 6 to March 25, 2020.
Besides, the lender would seek nod from the shareholders for appointment of former RBI Deputy Governor R Gandhi as an Additional (Independent) Director for five years from July 23, 2022 to July 22, 2027.
Gandhi was on board of the bank from May 14, 2019 to March 5, 2020 and from March 26, 2020 to July 15, 2022 as an Additional Director appointed by RBI.
At the EGM, the bank would also seek approval to increase its authorised share capital from Rs 6,200 crore to Rs 8,200 crore as well as to alter its capital clause of the Memorandum of Association.