Yes Bank in India has received an offer from an unnamed investor in the amount of $1.2 billion for a stake in the bank, according to a report in the Financial Times.
Shares in the company went up 20 percent on the news. Although the bank did not name the investor, the investor made the offer through newly issued equity. Yes Bank said it was in “advanced discussions with other global and domestic investors” as it continued to try and raise funds.
The deal is still awaiting approval by the bank’s shareholders and the board. Regulators must approve it as well.
Yes Bank is a private-sector bank that mainly operates as a corporate bank, but it also does asset management and retail banking.
The bank has had a tumultuous 2019, facing increased attention from regulators as well as scrutiny from investors, who are concerned about bad loans, lack of lender regulation and availability of capital.
Shares in Yes Bank were down 80 percent from January to September, but rebounded on the news of the investment.
On Thursday (Oct. 31), shares were up 24 percent after trading about 30 percent higher than usual. The Bombay Stock Exchange’s Sensex index also saw record highs, with a rally of more than 40,300 points due to a corporate tax cut and other business-boosting reforms.
This year, Yes Bank’s founder, a billionaire named Rana Kapoor, recently was asked to step down as the CEO of the bank by the Reserve Bank of India (RBI). He was replaced by Deutsche Bank executive Ravneet Gill.
Yes Bank was founded in 2004; it grew rapidly, but was affected by more corporate defaults in the country. The bank also misrepresented its non-performing loans in 2016 and 2017, according to the RBI, which said Yes Bank lied to the public and committed “several other lapses and regulatory breaches.”