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SPGP Holdings, backed by Canada-based Erwin Braich, offers $1.2 billion to YES Bank

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SPGP Holdings, backed by Canada-based Erwin Braich, offers $1.2 billion to YES Bank

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YES Bank’s board will reconvene on December 10 to finalise the recapitalisation plan and hold an extraordinary general meeting for shareholders’ approval.

SPGP Holdings, backed by Canada-based Erwin Braich, offers $1.2 billion to YES Bank
After a marathon meeting of eleven hours, YES Bank’s board has extended till December 31 the bid submitted by Hong Kong-based SPGP Holdings, which is backed by Canadian family office of Erwin Singh Braich.
SPGP Holdings and Erwin Braich have given a binding term sheet of $1.2 billion. Citax Group has offered $500 million and others like GMR Group, Rekha Jhunjhunwala and Aditya Birla Family Office have shown interest in making smaller investments in YES Bank
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YES Bank’s board will reconvene on December 10 to finalise the recapitalisation plan and hold an extraordinary general meeting for shareholders’ approval. The preferential allotment of shares will be subject to regulatory approval.
"The RBI has indicated to the bank that they will not be comfortable with any one investor owning over 20 percent stake in the bank," sources privy to the developments told CNBC-TV18.
YES Bank has increased the fundraising target to $2 billion and is looking to have a combination of a large investor like SPGP and Erwin Braich with a clutch of small investors.
The bank has stated that no single investor can hold more than 25 percent of the total share capital. This preferential allotment of shares will be done as per Sebi formula of two weeks or 26 weeks average price, whichever is higher.
On October 31, CNBC-TV18 had reported that SPGP Holdings and Canadian family office have put in a bid of $1.2 billion, the same time YES Bank notified to the exchanges that they have received a term sheet from a foreign investor without disclosing the name of the investor. For the last one month bank’s management has conducted several discussions with FIIs, DIIs, HNIs, PEs and family offices for receiving concrete investment proposals.
Earlier this month, YES Bank CEO Ravneet Gill told CNBC-TV18 in an exclusive interview that the bank had received bids worth $3 billion from eight investors. Sources in the know told CNBC-TV18 that private equity firms like Advent, TPG Capital, Carlyle had spent a lot of time discussing investment opportunity in YES Bank but none of them fructified.
SPGP Holdings is a Hong Kong-based investor backed by Canadian family office EB Family Trust. The investor has been keen on investing in India and has been exploring various opportunities in the distress asset space. After deciding against investment in Reid & Taylor, it’s now exploring a deal to buy Dighi Port under the IBC process.
Any large investor has the potential to increase its holding above the promoter Madhu Kapur’s stake in the bank which was at 6.87 percent till last reported in September-end. Rana Kapoor has sold most of his holdings in the bank.
YES Bank needs to shore up its tier 1 capital to provide enough cushion for its requirement to provide for several stressed assets in the corporate lending book. Apart from real estate exposure, loans to ADAG companies, Jet Airways, DHFL amongst others have been a cause of worry for the investors.
In Q2FY20 result announcement, YES Bank increased its credit cost guidance to 225-250 basis points from 125 for FY20. GNPA ratio rose to 7.39 percent vs 5.01 percent on a QoQ basis and the BB & below-rated asset book saw addition of Rs 5230 cr in the quarter.
Apart from higher slippages, YES Bank also saw lower deposits, advances and loan growth in the quarter. Bank’s CET 1 ratio stood at 8.7 percent barely above the regulatory requirement of a minimum 8 percent .
The last fundraising by YES Bank was completed in August 2019 when the bank raised Rs 1,930 crore via QIP with a 10 percent dilution, it was priced at Rs 83.55 per share. Since then the share price of YES Bank has seen a reduction hovering around Rs 70 per share levels currently.
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