Yes Bank 'looking at' $500-mn Citax offer leaves capital

Yes Bank's much talked about big ticket fund raising ended in a whimper on Tuesday with the struggling lender announcing only USD 500 million of the USD 2-billion target, that too is being only "favourably" looked at, putting a big question mark on its ability to mop up the badly needed capital. Citax Holdings and Citax Investment Group, funds led by one Srinivas Solaraj, have made the offer to invest USD 500 million, the bank informed the exchanges after the board meeting.

The uncertainty over fund-raising saw Yes Bank stocks coming under heavy selling pressure, pulling down the already battered stock 10.5 percent to Rs 50.55 on the BSE as against a correction of 0.61 per cent on the benchmark. In August 2018, when RBI refused to clear co-founder and chief executive Rana Kapoor's reappointment, it was trading over at Rs 240. The reported USD 1.2-billion offer by Canadian investor Erwin Singh Braich/SPGP Holdings "continues to be under discussion", the bank said after the board meeting specifically held to finalise capital infusion.

The statement also said the bank continues to "evaluate" other potential investors to raise USD 2 billion. Capital constraints have forced Yes Bank to go slow on lending last quarter and shoring up the buffers has become a priority for the bank, which is headed by Ravneet Gill since March this year.

On November 29, the bank had said it had commitments for USD 2 billion from eight domestic and global investors and that the Tuesday's board meeting was to finalise it. "The board is willing to favourably consider the offer of USD 500 million from Citax Holdings and Citax Investment and the final decision regarding allotment will be made at the next board meeting, subject to requisite regulatory approvals," the bank informed the exchanges, but without stating when the next board meeting will take place.

Other investors who have evinced interest include Braich, the country's largest individual investor Rakesh Jhunjunwala, GMR Group and the Aditya Birla Family Office, the bank had claimed on November 29. "We shall continue to evaluate other potential investors to raise capital up to USD 2 billion," the lender said on Tuesday.

On November 29, it had said discussions with Braich were expected to conclude shortly and a binding term sheet had been extended till December 31. During an interaction in early November, Gill had told PTI that the bank was in discussions with investors who were willing to collectively pump in USD 3 billion, including what later got revealed as Braich's USD 1.2 billion offer.

The bank had said it had to go slow on lending in the September quarter due to capital scarcity, and that it would like to get done with the infusion by end of December itself. It can be noted that the goings have been difficult for Ye Bank since August last year, when the RBI refused to clear Kapoor's reappointment citing concerns over governance and loan practices.

Immediately after his appointment in March this year, Gill identified stressed assets and started providing for them, resulting in it reporting its first ever quarterly loss in March this year. The board had on November 29 decided that it would raise up to USD 2 billion through a preferential allotment of shares to the investors who have evinced interest, which also include Discovery Capital and Ward Ferry.

It had also claimed to have made interest from an unnamed "top-tier" US fund house to invest USD 120 million. PTI AA BEN BEN.