Yes Bank reconstruction plan: AT1 bondholders likely to get 10% stake

March 14, 2020 4:15 AM

FE has learned that another private lender Kotak Mahindra Bank is likely to pick 3.12% with an investment of Rs 500 crore.

The bank will acquire 100 crore equity shares for investment of over 5%.In a release to stock exchanges on Friday, Kotak Mahindra Bank informed that board has approved investment of Rs 500 crore in Yes Bank.

By Ankur Mishra

In what will come as a relief to the Additional Tier 1 (AT1) bond holders of Yes Bank, the proposed reconstruction plan will offer them around 10% equity stake as per the reconstruction plan submitted by State Bank of India (SBI), sources close to development told FE.

The plan entails an investment of Rs 11,850 crore by SBI and 7 other investors for a equity stake of 74% in the reconstructed bank, the source added. While SBI will pick up 45.3% stake, HDFC and ICICI Bank would acquire another 6.24% each for Rs 1000 crore. The proposal has been submitted to the Reserve Bank of India (RBI) on Thursday.

HDFC and ICICI Bank notified exchanges separately on Friday that their respective boards approved investment of Rs 1,000 crore in excess of 5% at Rs 10/share in Yes Bank.

Similarly, Axis Bank notified to stock exchanges that they will invest up to Rs 600 crore in Yes Bank at Rs 10/share. Commenting on the investment in Yes Bank, Amitabh Chaudhry, MD & CEO, Axis Bank said, “The bank strongly believes in the long-term prospects of the banking industry in India and we are happy to have an opportunity to contribute to the stability of the system.”

FE has learned that another private lender Kotak Mahindra Bank is likely to pick 3.12% with an investment of Rs 500 crore. In a release to stock exchanges on Friday, Kotak Mahindra Bank informed that board has approved investment of Rs 500 crore in Yes Bank. FE also learned that high networth individuals, Rakesh Jhunjhunwala, RK Damani and Azim Premji Trust, will invest Rs 500 crore each for an equity stake of 3.12%.

According to the plan, submitted by SBI, AT1 bondholders will get 170 crore shares at Rs 10 apiece, which will account for around 10% stake in the reconstructed bank. This would imply around 80% mark down for AT1 bondholders of Yes Bank for their investment of around Rs 8,800 crore. The AT1 bond holders, represented by Axis Trustee Services did not press for early hearing of the case filed in Bombay High Court on Wednesday, as they were awaiting settlement with RBI.

FE has learnt that according to the proposal there will be a fresh issue of 1,300 crore shares, over and above the existing 255 crore shares. This would mean significant equity dilution for existing investors of Yes Bank.

State Bank of India (SBI) on Thursday said it would invest Rs 7,250 crore in Yes Bank for a stake of up to 49%. The bank declared to buy 725 crore shares in the private sector lender at Rs 10 apiece.

The proposal submitted by SBI also mentions quantum of bad loans to be in the tune of Rs 40,000 crore in worst case scenario, the source further said.

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