Yes Bank, the fourth largest private lender in India, has announced that a top tier US fund house will back its $2 billion fundraising to stay afloat.
In a stock exchange filing, India's Yes Bank, said that a number of investors had "individually expressed their agreement [or] willingness" to buy shares worth a total of $2 billion, including $120 million from a "top tier US fund house".
The company's board has approved the sale of shares and will meet next week to finalize their allotment as the bank emphasized that no single investor will be allowed to hold more than 25% of the company. According to Yes Bank, the investors include international asset management funds Discovery Capital and Ward Ferry, as well as several family offices.
The bank did not specify the top institutional investor from the US but said that it would be disclosed this week. Despite the announcements, Yes Bank shares went down by over 6% in Mumbai on Monday.
Analysts at Nomura wrote in a research note on Monday that one reason for the unease from investors is because only a fraction of the $2 billion commitment "is from well-known funds [or] investors." They pointed out that while "a large capital raise would address the [on]going concern" for the bank, it will likely be difficult for the company to recover.
In a research note last month, the Nomura analysts highlighted that Yes Bank's latest financial results were "significantly weak". Since the ouster of its founder and chief executive officer (CEO) last year, the bank has struggled and its share has dropped most of its value in the previous year.
Yes Bank has also been under increased criticism as the Indian government continued its initiative of trying to clean up its banking sector, which currently suffers from billions of dollars in bad loans.
