While there have been talks of Yes Bank offloading a third of its equity to private investors in order to meet the capital adequacy norms, at least two Indian entities are said to be keen to acquire 10% each of the bank’s shares. One of them is Sunil Munjal of the Hero Group, now flush with funds after he parted with Hero MotoCorp. The other is Hemendra Kothari, of the DSP Group. Both Munjal and Kothari are likely to use their family offices to make the investments, according to these reports. The fact remains that their investments in Yes Bank can be made only after the Reserve Bank of India approves it since any investment in an Indian bank above 5% of its equity has to be approved by the regulator.
It is projected that the collective amount Yes Bank can mop up if the two entities go through with their investments as indicated, would be to the tune of ₹3,500 crore approximately. The bank would need these funds to augment its capital adequacy ratio. The sources revealing these details have informed that Arpwood Capital has been appointed by the Kothari family office to be the banker-cum-adviser to the deal.
The report also suggests that Sunil Munjal has set his sights on the Indian financial sector for making investments and if some of the fintech startups also have connection to the mobility space.
As regards Yes Bank, the bank has come under heavy weather following revelations of several bad loans and the management had to be changed at the top level with Ravneet Gill being appointed CEO and Rana Kapoor the founder CEO exiting. RBI has been keeping a close watch on the bank and advising it to stay above the various fiscal requirements for the bank to stay liquid. As of the September quarter, Yes Bank’s tier I capital adequacy ratio is reported at 11.5% where the regulatory requirement is 8.875%. Its common equity tier 1 capital stood at 8.7%, the regulatory requirement here being 7.375%.
More may be heard about Yes Bank in the coming weeks. The bank’s stock has definitely gained immensely from these reports of fresh investments being made with the share quoted at ₹73, gaining around 128% since October 1.