RBI conditional nod to Advent, Carlyle’s stake buy in YES Bank

The Reserve Bank of India (RBI) has issued conditional approval to funds affiliated to global private equity investors Carlyle and Advent International with regard to the planned acquisition by each of them of 9.99 per cent of share capital of YES Bank.

“We hereby inform you that vide separate letters date November 30, 2022, the Reserve Bank of India (RBI) has issued a conditional approval to each Investor with respect to the proposed acquisition by each of them of up to 9.99 per cent of paid-up share capital of the bank through subscription to equity shares and share warrants of the bank and the investors are evaluating the conditions,” YES Bank informed stock exchanges on Thursday.

“The investors and the bank will engage with the RBI to seek an early resolution of the conditions to procure the final approval on this matter,” the bank said. The proposed investment is by CA Basque investments, which is a part of the group, which globally conducts business as The Carlyle Group and Verventa Holdings Limited, an affiliate of funds managed by Advent.

In July, YES Bank had announced raising equity capital worth $1.1 billion (~8,900 crore) through funds affiliated to global private equity investors Carlyle and Advent International. Each investor would potentially acquire up to 10 per cent, YES Bank had said.

The fund-raising would be conducted through a combination of $640 million (~5,100 crore) in equity shares and $475 million (~3,800 crore) through equity share warrants, YES Bank had said. The acquisition by the investors would add ~8,900 crore to the equity capital base, the private lender had said in July.

In an interview with Business Standard in July, YES Bank’s Managing Director and Chief Executive Officer Prashant Kumar had said after steadying the ship for two years, the lender would focus on growing business from this financial year and would raise around $1 billion through equity capital. Subsequently, Kumar said at a media event that fund raising of that magnitude would take YES Bank’s common equity tier-1 ratio to 14 per cent from 11.5 per cent.

In November, Kumar said YES Bank would make the transfer of ~48,000 crore of stressed loans to asset reconstruction company JC Flowers by the end of the month.

After the signing of the binding term sheet by YES Bank with JC Flowers ARC LLC and JC Flowers ARC for a strategic partnership related to the sale of the stressed loan portfolio, the lender’s board also approved the investment need to buy up to 19.99 per cent equity stake in the private equity firm. The purchase can be made in single or multiple tranches, subject to regulatory approval.

Earlier this week, YES Bank signed a share purchase agreement, acquiring a 9.9 per cent stake in JC Flowers.

In July-september, YES Bank’s asset quality profile improved with gross non-performing assets (GNPAS) at 12.9 per cent till as on September 30, 2022, compared with 15 per cent a year ago. The bank’s net NPAS dipped to 3.6 per cent from 5.5 per cent.