Yes Bank has received board approval to raise to Rs 16,000 crore through a combination of equity and debt instruments, marking a significant move to strengthen its capital base and support future business growth. The private sector lender plans to mobilise Rs 7,500 crore via equity issuance and Rs 8,500 crore through debt securities, with both components subject to shareholder and regulatory clearances.
The equity capital will be raised through various permissible instruments, ensuring that the total dilution does not exceed 10 percent, including any conversion of convertible debt securities. The debt instruments may be denominated in Indian or foreign currency and will be issued in multiple tranches, both domestically and internationally, as part of an effort to optimise the bank’s capital structure and maintain compliance with regulatory requirements.
This fundraising initiative comes on the heels of a landmark agreement with Japan’s Sumitomo Mitsui Banking Corporation (SMBC), which will acquire a 20 percent stake in Yes Bank for Rs 13,483 crore through a secondary market transaction. Following the completion of this deal, SMBC will emerge as Yes Bank’s largest shareholder, while State Bank of India (SBI) will reduce its stake to 10.8 percent after selling a 13.19 percent holding for nearly Rs 8,890 crore. Other major lenders, including HDFC Bank, ICICI Bank, Kotak Mahindra Bank, Axis Bank, IDFC First Bank, Federal Bank, and Bandhan Bank, will collectively hold 2.9 percent after divesting their combined 6.81 percent stake. The transaction, which values Yes Bank at Rs 67,416 crore, is subject to approvals from the Reserve Bank of India and the Competition Commission of India.
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As part of the strategic partnership, Yes Bank will amend its Articles of Association to allow SMBC to infuse fresh equity and maintain its 20 percent stake through pro-rata pre-emptive rights in future issuances. SMBC will also have the right to nominate two non-executive, non-independent directors to the Yes Bank board, while SBI will retain the right to appoint one nominee director. This cross-border investment is the largest in the Indian banking sector to date and is expected to accelerate SMBC’s business operations in India, fostering trade and capital flows between Japan and India.
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