Yes Bank looking for financial advisers to raise an additional Rs 5,000 crore

Yes Bank wants to raise an additional ₹5,000 crore for which it has now asked for advisers. It has issued a request for proposal (RFP) for it, according to a report in LiveMint. 

It may be recalled that only last month, the Reserve Bank of India intervened and rescued the bank from going under. A number of banks and non-banking financial corporations, led by the State Bank of India, pitched in with ₹10,000 crore. The others to have put in funds in Yes Bank include Housing Development Finance Corp., ICICI Bank, Kotak Mahindra Bank, Bandhan Bank, Federal Bank and IDFC First Bank. State Bank of India presently holds 48.2% of Yes Bank equity.

Subsequently, the bank’s newly constituted board gave the approval to raise an additional ₹5,000 crore. The present exercise to locate the financial advisers to raise the funds is in relation to this.

Bank of America, Citi, ICICI Securities, Axis Capital are some of the entities said to in the running to bag the mandate to bring in the investors. There are options available to the bank to allot the fresh shares to the investor as qualified institutional placement (QIP) or issue rights to be subscribed by them. There is also the possibility some of those who invested along with SBI may cash out, yielding to the new investors.

Yes Bank came under the close scrutiny of RBI several months earlier when its loan portfolio showed a sudden jump under the leadership of the promoter of the bank, Rana Kapoor. He was replaced and a new board and CEO appointed. But when things looked serious, RBI intervened and placed a moratorium on withdrawals. That is when a resolution plan was quickly drafted and SBI and others brought in ₹10,000 crore to rescue the bank. 

Rana Kapoor is currently under investigation by ED and other central agencies for a number of alleged crimes and irregularities.