scorecardresearchYes Bank shares crack 8% after PE majors Carlyle, Advent pick stake

Yes Bank shares crack 8% after PE majors Carlyle, Advent pick stake

Updated: 14 Dec 2022, 12:42 PM IST
TL;DR.
The two private equity (PE) funds together would pump in about 8,896 crore in Yes Bank with the full conversion of warrants into equity.
The investment by the PE funds will be one of the biggest in the banking sector in recent times.

The investment by the PE funds will be one of the biggest in the banking sector in recent times.

Shares of Yes Bank slipped over 8 percent on Wednesday, December 14, a day after the company informed that its board has approved the allotment of 369.61 crore equity shares and 255.97 crore warrants, representing a 9.99 percent stake, to private equity majors – The Carlyle Group and Advent.

The bank has allotted a total of 369.61 crore shares of face value 2 each and 255.97 share warrants convertible into equity shares of face value 2 each on a preferential basis to CA Basque Investments, a Carlyle Group entity, and Verventa Holdings Limited, an Advent group entity, the official report stated.

The two private equity (PE) funds together would pump in about 8,896 crore in Yes Bank with the full conversion of warrants into equity.

During Wednesday’s trade, the stock opened positively at a price of Rs. 24.05 per share against the previous close of Rs. 23.95 per share and rallied during the early trade to touch a new 52-week high of Rs. 24.75 per share.

However, the stock failed to hold on to this rally and plunged soon after to reach an intraday low of Rs. 22.05. It was trading at 22.55, down by 5.85 percent, at 11:50 a.m. on the NSE.

The stock touched a 52-week low of Rs. 12.10 on March 30, 2022, indicating that at the current level, the stock is trading over 86 percent above its 52-week low.

In the past one month, the stock has shown a positive growth of over 32 percent. It has grown by nearly 78 percent in the last six months. However, the stock has declined by almost 93 percent in the last five years.

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Stock price chart of Yes Bank

The bank will issue 184.8 crore shares to Carlyle Group entity CA Basque Investments at Rs. 13.78 per share, and 127.98 crore convertible warrants at Rs. 14.82 per warrant. These warrants are convertible into 1 share each.

Similarly, Advent International's entity Verventa Holdings will get 184.8 crore shares at Rs. 13.78 per share, and 127.98 crore convertible warrants at Rs. 14.82 per warrant.

The bank informed that it has added new directors to its board by appointing a nominee from each of the PE companies. Carlyle has chosen Sunil Kaul as its nominee, and Advent has chosen Shweta Jalan.

The investment by the PE funds will be one of the biggest in the banking sector in recent times. It was announced after the bank was able to make progress on a plan to house nearly 50,000 crore of bad loans in a newly carved asset reconstruction company for which it has tied up with JC Flowers.

Global brokerage house Morgan Stanley expects the loan growth to accelerate to a 20 percent CAGR over FY23-25 against an expected 15 percent in FY23 while placing the price target at Rs. 20.50 apiece.

Yes Bank is engaged in providing banking services, including corporate and institutional banking, financial markets, investment banking, corporate finance, branch banking, business and transaction banking and wealth management.

According to a Mintgenie poll, 14 analysts on average have a ‘SELL’ call on the stock.

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First Published: 14 Dec 2022, 12:42 PM IST