Carlyle, Advent seal $1.1 bn private equity investment in Yes Bank

 Carlyle, Advent seal $1.1 bn private equity investment in Yes Bank

India’s sixth largest private bank, Yes Bank said Friday that funds associated with global private equity investors – Carlyle and Advent International- are chipping in with equity capital of around $1.1 billion (Rs 8,900 crore) to strengthen its balance sheet.

The two PE firms will pick up to 10% stake each. The money will be raised through a combination of around Rs 5100 crore ($640 million) in equity shares and Rs 3800 crore ($475 million) through equity share warrants.

The capital raise is subject to shareholders’ approval at the EGM of the bank to be held on August 24, 2022 and relevant regulatory approvals.

The capital raise will further bolster the capital adequacy of Yes Bank that had been hit with poor asset quality in its portfolio after the firm’s co-founder and former chief Rana Kapoor was ousted over corporate governance issues.

State-run SBI had picked a stake in the company and had been steering its operations for the last couple of years.

Yes Bank said it proposes to issue around 370 crore equity shares on a preferential basis at a price of Rs 13.78 each and around 257 crore warrants convertible into equity shares at a price of Rs 14.82 per warrant, adding Rs 8,900 crore to the equity capital base.

Sunil Kaul, Managing Director and Financial Services sector lead for Carlyle in Asia, said, “We are confident about India’s long-term economic growth prospects and believe that Yes Bank is well placed to capture this growth, given its strong capabilities in transaction banking and digital payments.”

Shweta Jalan, Managing Partner, Advent International, said, “We believe India’s banking sector is at an inflection point where tech-enabled banks like Yes Bank have an advantage.”

Headquartered in Mumbai, Yes Bank is a full-service commercial bank that has been in operations for the last 18 years and has a pan-India footprint with over 1,140 branches across all 28 states and nine Union Territories in India.

It also operates investment banking, merchant banking and brokerage businesses through Yes Securities.

Yes Bank was advised by BofA Securities as an exclusive financial adviser and AZB & Partners as a legal advisor, while Carlyle was advised by Shardul Amarchand Mangaldas (SAM) and Advent was advised by Cyril Amarchand Mangaldas (CAM).

This deal comes soon after Yes Bank inked deal to sell $6 billion stressed assets portfolio to JC Flowers.

Advent, Carlyle

For Advent this would be the first investment in a banking entity in India though it has previously backed other companies in the financial services domain including Aditya Birla Capital (a holding company for the financial services businesses of Aditya Birla Group) through which Advent has exposure to lending, asset management and insurance amongst others, and ASK Investment Managers (a leading portfolio management service provider, real estate investment manager and wealth manager in India).

In January, Advent inked a control deal for Indian API maker Avra Labs. Last year, it inked a buyout deal for ZCL Chemicals and participated in a late-stage funding round of tech startup Zenoti.

In December, it acquired a majority stake in digital engineering services firm Encora Digital Inc from PE firm Warburg Pincus at a valuation of approximately $1.5 billion.

Last September, it struck a deal to acquire Eureka Forbes from Shapoorji Pallonji Group.

Apart from Eureka Forbes, Advent has made four consumer-sector investments in India. These are Crompton Greaves Consumer Electricals, Dixcy Textiles, Enamor and DFM Foods.

Advent that has been investing in India since 2007 and has invested and committed almost $2.9 billion across 13 companies in sectors such as financial services, consumer products, healthcare, industrial and technology.

For Carlyle, this comes weeks after it backed Varmora Granito in first new India investment of 2022.

Sumit Upadhyaya

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