Stock jumped over 4% after reports of a fresh ₹16,000 crore funding plan from Japan’s SMBC.
Proposed infusion includes ₹7,500 crore in equity and ₹8,500 crore in debt.
Funding seen as a step towards SMBC taking stronger ownership.
Shares of YES Bank soared over 4% on August 29 on the back of reports that suggested Japan-based Sumitumo Mitsui Banking Corportion’s (SMBC) plan to pout in another Rs 16,000 crore (roughly $1.8 bln) in the lender through a mix of equity and debt.
According to a report in the Economic Times, the proposed funding is aimed to strengthen YES Bank’s balance sheet and could pave the way for SMBC to take greater control in the lender.
The fresh infusion is expected to include ₹7,500 crore via equity and ₹8,500 crore through debt instruments. This would be over and above the ₹13,500 crore SMBC has already committed to pay existing shareholders including State Bank of India (SBI) and others, for a 20% stake purchase in the bank.
While the ₹16,000 crore will flow directly into YES Bank’s books, the ₹13,500 crore is earmarked for the current shareholders’ exit, the report stated.
As part of the debt component, SMBC is said to be considering yen-denominated bonds worth ₹8,500 crore, priced below 2%, offering the bank low-cost, long-term funding. The equity contribution of ₹7,500 crore is likely to come through foreign currency convertible bonds (FCCBs), providing a boost to YES Bank’s capital base.
The development follows YES Bank’s disclosure last week that the Reserve Bank of India had cleared SMBC’s plan to acquire up to a 24.99% stake. Earlier, in May, YES Bank revealed SMBC’s proposal to acquire a 20% holding via a secondary stake purchase, comprising SBI’s 13.19% share and a combined 6.81% from seven other banks, including Axis Bank, Bandhan Bank, Federal Bank, HDFC Bank, ICICI Bank, IDFC First Bank and Kotak Mahindra Bank.
The buzz around restructuring and its positive impact on YES Bank’s growth outlook has triggered an over 14% spike in shares of the lender over the last six months. Even in today’s session, trading volumes in the counter were high on the back of the growing optimism over the lender’s future growth. As many as 16 crore shares of YES Bank changed hands in trade thus far, already surpassing the one-month daily traded average of seven crore shares.
