Yes Bank said on Friday it will raise $2 billion by selling a large tranche of new shares to a clutch of institutional investors and wealth managers. As part of the plan, the bank, India's fifth-largest private sector lender, said it is in talks to sell shares worth $1.2 billion to Canadian billionaire Erwin Singh Braich and Hong Kong-based SPGP Holdings, which he backs.
In an interview, Ravneet Gill, CEO and MD, Yes Bank revealed the bank's next steps and how it will proceed with the fund-raising plan, and at what price and what is the requirement of the money.
Talking about the board’s approval for $2 billion fundraising, Gill said, “First and foremost, $1.2 billion has actually been approved by the board, but if you look at the increase in the authorised share capital that happened in the board meeting of August, at current market prices enables us to raise a lot more." The opportunity that exists for private sector banks today has become much broader given the current state of the financial services in the country, according to him. "We thought that if such an opportunity does exist won’t it be better to capitalise ourselves, even more then what we had initially set out to do and then monetise this big growth opportunity that lies ahead of us,” he said.
Gill said the one takeaway that the market should have from this board announcement of Friday is the fact that there is $2 billion of capital available to the bank. On utilising the $2 billion fund, he said, “This is a point of transition and transformation as far as the bank is concerned. Once the capital is in the whole narrative around the bank changes. For two and a half quarters we have basically consolidated."
Gill said the India macros have bottomed out and his company definitely believes that there is a pickup that will open up more growth opportunities for financial services players. Given that outlook and that optimism about the future, that is a very big driver in terms of from going from $1.2 to $2 billion.
In terms of business strategy, he said the management has articulated that it wants to build a bank where the revenue streams are much more balanced. "There is a good mix between wholesale and retail and we will continue to focus on more flow businesses.”