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State Bank of India will invest ₹7,250 crore in YES Bank to acquire shares at ₹10 a piece. While SBI did not disclose how much stake it will own post this share purchase, industry estimates are that the investment will fetch India’s largest bank about 33 per cent in YES Bank.
“The Executive Committee of the Central Board (ECCB) at its meeting held on March 11 accorded approval for purchase of 725 crore shares in YES Bank at a price of ₹10 per share subject to all regulatory approvals,” SBI said in a regulatory filing on Thursday.
Under a draft restructuring plan, about 2,400-crore shares of YES Bank were on the block. Assuming that there is no change in the total number of shares, 725 crore shares would give SBI about 33 per cent stake. SBI only stated that its shareholding in YES Bank Ltd will remain within 49 per cent of the paid-up capital of the private sector bank.
RBI revamp plan
The Reserve Bank of India had prepared a Draft ‘Yes Bank Ltd. Reconstruction Scheme, 2020’ on March 6 soon after it put the private sector lender under a moratorium. Going by the scheme, SBI was expected to invest between ₹2,450 crore and ₹10,000 crore in YES Bank.
SBI Chairman Rajnish Kumar had on March 7 said that if the lender goes solo and picks up 49 per cent, then the immediate investment requirement is ₹2,450 crore.
SBI has been in discussion with a number of investors, both foreign and domestic, for picking stake in the troubled private sector lender. YES Bank had been originally looking for a capital raise of about ₹10,000 crore and the plan being finalised was to ensure that the bank gets enough capital as well as liquidity when the moratorium gets lifted.
In an interview to BusinessLine , YES Bank Administrator Prashant Kumar had said that the moratorium on the lender will be lifted by March 14 and that he expects equity investments to be finalised even before that.
The YES Bank scrip on Thursday closed 13.02 per cent lower at ₹25.05 apiece while the SBI share also fell 13.23 per cent and ended at ₹212.75 apiece on the BSE.
Under the proposed reconstruction plan for YES Bank, the investor bank has to agree to invest in the equity of the reconstructed bank to the extent that post infusion it holds 49 per cent shareholding in the bank at a price not less than ₹10 (face value of ₹2 and premium of ₹8).
Further, SBI cannot reduce its holding below 26 per cent before completion of three years from the date of infusion of the capital.
SBI has been in discussion with a number of investors, both foreign and domestic, for picking up stake in the troubled private sector lender.
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