Yes Bank stock jumps 7% on Carlyle-Advent deal

Shares of Yes Bank rose for the third straight session on Monday after the lender received two letters from the Reserve Bank of India (RBI) in relation to the proposed investment by private equity investors Carlyle Group and Advent International.

The stock surged 7% to ₹21.15 on the National Stock Exchange (NSE) on Monday. Shares of the lender have risen 19% in the last two trading sessions

This comes days after the banking regulator gave a conditional approval to Carlyle Group and Advent International to acquire up to 9.99% each in private lender Yes Bank.

"Further to the Reserve Bank of India, issuing a conditional approval to each investor with respect to the proposed acquisition by each of them of up to 9.99% of paid up share capital of the Bank through subscription to equity shares and share warrants of the Bank vide separate letters dated November 30, 2022, we wish to hereby inform that the bank is now in receipt of two further letters (separate to each investor) from the RBI in relation to the proposed investment," the private lender said in a stock exchange filing on Friday.

The bank said it will now engage with the investors for the completion of the proposed fundraise, subject to various regulatory compliances.

The proposed investment is by CA Basque investments, a part of The Carlyle Group and Verventa Holdings Limited, an affiliate of funds managed by Advent.

Yes Bank had in July announced raising equity capital worth ₹8,900 crore from global PE investors Carlyle Group and Advent International, with each investor potentially acquiring up to a 10% stake in the private lender.

The bank will raise the funds through a combination of about $640 million in shares and about $475 million in share warrants. Yes Bank proposes to issue 3.70 crore equity shares on a preferential basis at a price of ₹13.78 per share and 257 crore warrants convertible into equity shares at a price of ₹14.82 per warrant, adding ₹8,900 to the equity capital base of the bank.

Meanwhile, net profit of the private lender declined 32.2% year-on-year to ₹152.8 crore during the second quarter, as compared with ₹225.50 crore in the same period last year. However, the private sector lender reported a 32% year-over-year rise in the net interest income (NIIs) to ₹1,991 crore for the quarter ended September. NII stood at ₹1,512 crore in the year-ago period. Net interest margins (NIMs) increased by 40 basis points to 2.6% during the second quarter. Yes Bank’s gross NPAs improved to 12.89% in the July-September quarter from 13.45% in the quarter ended June 30, 2022.

Yes bank had earlier said it will transfer stressed assets worth ₹48,000 crore to asset restructuring company JC Flowers by the end of November this year. The private sector lender selected JC Flowers for the sale of its stressed loans after a consortium of Cerberus Capital and Asset Reconstruction Company of India (ARCIL) withdrew its bid.