In Hunt for New Promoter, Yes Bank Values Itself at $8–9 Billion

14 Mar 2024 , 11:12 AM

In terms of assets, Yes Bank is the sixth-largest private sector lender in India, and it is seeking a new promoter. According to reports, the bank intends to sell up to 51% of its stake for a target price of $8–9 billion, a substantial rise above its $7.2 billion market capitalization at present. A buyer search has been aided by the involvement of Citigroup’s India unit.

Several Indian lenders, including current owners, have received invites from Yes Bank to take part in this initiative. The bank has started talks to sell at least a 51% share in Yes Bank with banks and financial institutions in Europe, West Asia, and Japan.

As per central bank regulations, the Reserve Bank of India (RBI) must grant special approval for any new promoter who holds a shareholding greater than 26%.

Major shareholders including State Bank of India (SBI), Life Insurance Corp. Of India (LIC), HDFC Bank Ltd., and ICICI Bank Ltd., who stepped in to save Yes Bank in 2020 when it was on the verge of failure under its former management, may be able to leave the company through the prospective stake sale.

With a 29% stake, SBI is the largest stakeholder. To guarantee transparency in day-to-day management procedures, the incoming promoter will acquire up to 51% ownership, the bank informed the designated investment banker.

Following the change in ownership, Yes Bank’s financial performance has improved, as evidenced by a noticeable rise in its deposit base and a move toward safer lending practices. Perceptions about the caliber of its loans, however, continue to have an impact on the possible transaction.

A change in ownership might revitalize Yes Bank by encouraging competition among private lenders and providing better conditions to borrowers. In light of the anticipated expansion of the Indian economy, foreign banks in particular find the arrangement appealing.

The acquisition’s schedule, which is set for the fiscal year 2025, demonstrates the interest from international players. This calculated action comes after the Reserve Bank of India’s (RBI) involvement in March 2020, when SBI and other financial institutions intervened to support Yes Bank during a financial crisis.

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