YES Bank's deal with Carlyle, Advent on $1 bn stake investment gathers pace

Carlyle's top executives and Advent's leaders in a series of meetings with Yes Bank and SBI's senior management, and RBI officials this week decided the contours of the investment plan

After the proposed sale of YES Bank's bad loans to JC Flowers Asset Reconstruction Company, the private lender's plan to bring Carlyle and Advent on board for a potential $1 billion investment has now gathered pace, a report by The Economic Times reported on Friday. 

 

The Carlyle Group's top executives from Hong Kong and Advent International's leaders, in a series of meetings with Yes Bank and its largest shareholder, State Bank of India's (SBI's) senior management, and Reserve Bank of India officials this week, decided the contours of the investment plan that will be undertaken in phases, people aware of the matter told ET. 

 

The proposed investment of Carlyle and Advent in YES Bank could be similar to Bain Capital's investment in Axis Bank. The Boston-based private equity firm had led a consortium to invest $1.8 billion in the bank. 

 

According to the report, YES Bank is expected to issue nearly 2.6 billion warrants to Carlyle and Advent and allot the PE funds new shares under the deal. 

Also read: YES Bank plans to invest Rs 350 cr in JC Flowers, raise $1 bn in FY23

 

The two firms will cumulatively invest Rs 3,600-3,900 crore, at Rs 14-15 per share in the private lender and will own 5 per cent each of the expanded equity base, the ET reported. 

 

The report said that the warrants issued by YES Bank will get converted into shares in the future based on a pre-agreed strike price and timeline, which is typically 18 months, the report said.

 

"The management believes the stock is undervalued but for investors, the current share price or a 52-week price average are the best benchmarks," one of the people aware of the matter told ET.

 

To keep SBI's stake at 26 per cent per the regulator-approved revival scheme, the private lender can issue a maximum of 3.8 billion warrants. 

 

The SBI currently owns a 30 per cent stake in YES Bank.

 

The transaction is expected to take place once Yes Bank's deal with JC Flowers concludes and shareholder approval for the new board members is finalised, which is expected by September, the ET report stated.