Yes Bank share price jumps ahead of board meet to approve allotment of preferential shares

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Published: December 9, 2019 12:11:25 PM

Shares of private sector lender Yes Bank are trading higher on Monday morning, ahead of the bank's board meeting to finalise preferential allotment of shares.

Yes Bank share price gained by more than 5% to hit the day’s high at Rs 58.80 on BSE. (Image: PTI)

Shares of private sector lender Yes Bank are trading higher on Monday morning, ahead of the bank’s board meeting to finalise preferential allotment of shares. Yes Bank share price gained by more than 5% to hit the day’s high at Rs 58.80 on BSE. Yes Bank’s Board of Directors will finalize and approve the details of the preferential allotment and convene an extraordinary general meeting subsequently, to obtain the approval of the shareholders for raising capital, at its meeting scheduled for today.

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The bank looks to raise up to $2 billion in capital. The bank had informed exchanges on Friday that it is in discussions with the family office of Canadian businessman Erwin Singh Braich, who has expressed interest in investing up to $1.2 billion in the bank. Further, ace investor Rakesh Jhunjhunwala’s wife Rekha Jhunjhunwala’s has also expressed interest to invest up to $25 million in the bank. Family office of Citax Holdings Ltd & Citax Investment Group are also looking to put in $500 million in the bank. Aditya Birla Family Office and GMR Group and Associates have also expressed their interest to invest $50 million each.  A Top Tier US Fund House– Capital International has also shown interest to invest around $120 million in the lender. Discovery Capital ($ 50 million), and Ward Ferry ($30 million) were also among interested investors.

However, global brokerages have raised concerns over the quality of its new investors. “We have big reservations regarding the quality of investors that have bid and we doubt whether RBI will give approval to such investors who want to take more than 10% stake”, global brokerage firm Macquarie said in a report on December 3. Last week, Moody’s Investors Service downgraded Yes Bank credit ratings due to stressed assets and low loss absorbing buffers against those assets. It also assigned a negative outlook to the company.  Moody’s downgraded Yes Bank’s long-term foreign currency rating from “Ba3” to “B2. ”The firm noted that potentially stressed assets and low loss-absorbing buffers may add pressure to Yes Bank’s funding and liquidity. This may create additional risks to its standalone credit profile.

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