Yes Bank is in advanced stages of negotiations to close a $1 billion equity fundraise from private equity firms Carlyle and Advent International, two people aware of the development said.
The fundraising talks had been progressing slowly because of the asset reconstruction company (ARC) deal that Yes Bank was running to offload a large chunk of the bad loans on its books, the people cited above said. The fundraise talks with Carlyle and Advent picked up pace with the bank deciding to partner with JC Flowers for the ARC and the discussions are likely to be concluded soon. However, this may take some more time as the bank is seeking shareholder approval for a new board of directors.
Emails sent to Yes Bank and Advent did not elicit a response. Carlyle declined to comment.
Mint reported on 2 June that Yes Bank has chosen JC Flowers Asset Reconstruction Co as its partner to offload bad loans of ₹49,000 crore as the lender seeks to clean up its books and raise capital to fund credit growth. JC Flowers offered ₹12,107 crore against the bad loan book, ensuring a 25% recovery. Yes Bank will need to invest ₹400 crore in the JC Flowers ARC to pick up a 20% stake in the company.
Payments by the joint venture company for the bad loan book will be made under the 15:85 structure, with ₹1,800 crore, or 15% of the agreed amount, to be paid upfront in cash to Yes Bank. The rest will be paid in security receipts to be redeemed as the ARC recovers money from defaulters.
The bad loan book of ₹49,000 crore includes so-called technical write-offs worth ₹17,000 crore and soured investments.
On 8 June, the bank announced that it has initiated the process of exiting the reconstruction scheme set up two years ago after the government and the Reserve Bank of India put in place a special plan to rescue Yes Bank.
The board of directors appointed under the scheme recommended the setting up of an alternative board and sought shareholders’ approval, following significant progress in turning the bank around, it said. The proposal will be taken up at the bank’s annual general meeting on 15 July.
