BUZZ-Yes Bank falls; analysts question investor quality in $2 bln fund raise - Reuters News
02-Dec-2019 02:29:49 PM
** Shares of Yes Bank YESB.NS, India's fifth-largest private-sector lender, fall as much as 7.7% to 63.05 rupees after co's announcement of $2 bln capital raise on Friday
** "We have big reservations about the quality of investors that have bid and we doubt whether the RBI will give approval to such investors who want to take more than 10% stake," Macquarie says in a note; adds that for nearly 85% of the $2 bln commitments, quality is a big concern
** Yes Bank said it is in talks to sell shares worth $1.2 bln to Canadian billionaire Erwin Singh Braich and Hong Kong-based SPGP Holdings, which he backs (Full Story)
** Other investors who have committed to buying shares include Discovery Capital, Aditya Birla Family Office from India and Citax Holdings Ltd & Citax Investment Group
** Total capital required could be around $3 bln-3.5 bln over the next 18 months, or roughly 1.5x the current market cap - that is an enormous dilution, well below the book value and extremely negative for minority shareholders, says Macquarie
** Even if bank manages to raise the capital, operational challenges in terms of deposit growth, bad loan recognition, provisions remain high, which will lead to depressed return on assets and return on equity - Citi