Yes Bank walks path on capital raisingYESBANK - 14 Change: 0.50 (3.72 %)
News: As per The Economic Times, private equity group Carlyle is considering a Rs.3,750–4,500 crore ($500-600 million) investment in Yes Bank along with peer Advent International. The bank is in talks with the private equity (PE) investors to raise Rs.7,500-11,250 crore ($1-1.5 billion) of growth capital to further bolster its balance sheet. The bank’s board, on January 21, 2021, approved a proposal to raise Rs.10,000 crore through modes including qualified institutional placements and foreign currency convertible bonds.
Views: We believe that this capital rasing will turn out good for Yes Bank. The bank had retained the RoA target of 1% by FY23, which is currently at 0.4%. The additional capital will foster growth for the bank, which look optimistic given its weak core earnings profile and poor asset quality. However, this will lead to near term dilution for existing shareholders.