Yes Bank Board Clears Rs 16,000 Crore Fundraising Plan to Boost Capital Base
Yes Bank on Wednesday received board approval to raise up to Rs 16,000 crore through a mix of equity and debt instruments, aiming to bolster its capital base and support future growth plans. The private sector lender will mobilise Rs 7,500 crore via equity issuance and Rs 8,500 crore through debt, with both components subject to shareholder and regulatory approvals.
The proposed equity fundraising will be executed through various permissible instruments, with the total dilution capped at 10 percent, including any conversion of convertible securities. On the debt side, Yes Bank intends to issue instruments denominated in Indian or foreign currencies across multiple tranches, both within India and overseas, as part of its capital optimisation strategy.
This development follows a major secondary market agreement between Yes Bank and Japan’s Sumitomo Mitsui Banking Corporation (SMBC), which will see the Japanese lender acquire a 20 percent stake in Yes Bank for Rs 13,483 crore. The transaction will make SMBC the largest shareholder in the bank. As part of the same deal, State Bank of India will pare its holding to 10.8 percent by selling 13.19 percent of its stake for nearly Rs 8,890 crore. Other prominent lenders, including HDFC Bank, ICICI Bank, Kotak Mahindra Bank, Axis Bank, IDFC First Bank, Federal Bank and Bandhan Bank, will reduce their collective shareholding from 6.81 percent to 2.9 percent.
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The SMBC deal values Yes Bank at Rs 67,416 crore and is pending clearances from the Reserve Bank of India and the Competition Commission of India. Once completed, this cross-border transaction will mark the largest foreign investment in the Indian banking sector to date.
As part of the strategic arrangement, Yes Bank will amend its Articles of Association to allow SMBC to maintain its 20 percent holding through pre-emptive rights in future issuances. The Japanese lender will also be entitled to nominate two non-executive, non-independent directors to the bank’s board, while SBI will retain the right to appoint one nominee director.
The infusion of capital and international partnership are expected to significantly enhance Yes Bank’s growth trajectory, enable deeper engagement with Japanese businesses in India, and support the lender’s broader transformation agenda.
Disclaimer: This post is for general informational purposes only. It does not constitute financial advice. Please consult a qualified professional before making financial decisions.
