State Bank of India will invest up to ₹1,760 crore in troubled private sector lender Yes Bank, which is set to come out with a follow-on public offer.
The decision was taken at a meeting of the Executive Committee of Central Board (ECCB) of SBI on Wednesday.
“The Executive Committee of Central Board (ECCB) of SBI at its meeting has accorded approval for a maximum investment of up to ₹ 1,760 crore in the further public offering of Yes Bank,” it said in a regulatory filing.
The announcement comes a day after Yes Bank said the Capital Raising Committee of its board has approved a proposal for capital raise through an FPO.
SBI has been a knight in shining armour for the troubled lender. As part of the reconstruction scheme, SBI along with other domestic banks and financial institutions invested ₹10,000 crore in Yes Bank. As on March 31, 2020, it owned 48.21 per cent stake in the lender.
Yes Bank is looking to raise between ₹10,000 crore and ₹15,000 crore through the FPO route and is understood to have filed the offer document with the Registrar of Companies.
It did not disclose details about possible investors and nor did it specify the amount it will raise through the FPO. Sources said the FPO could be launched as early as next week, with the latest being July 15.
“Post closure of the requisite formalities with the Registrar of Companies, Maharashtra at Mumbai, the details in respect of the Offer will be disseminated…,” it had said.
The committee will meet again on July 10 to approve the price band and discount amongst other issues, the lender said in a regulatory filing.
According to sources, Tilden Park Capital Management, which was also in the fray to invest in the lender, before it was put under the reconstitution scheme, may pick up a significant stake in the planned FPO and invest about ₹3,000 crore.
Another probable investor could be Life Insurance Corporation of India, which could put in about ₹1,500 crore.
YES Bank had recently restated its consolidated and standalone financial statements for the last three fiscals from 2017-18 to 2019-20.
On Wednesday, the bank’s scrip closed 1.36 per cent higher at ₹26.10 apiece on BSE. The bank had a capital adequacy ratio of 8.5 per cent as on March 31, 2020.