YES Bank shares in focus as lender to raise up to Rs 16,000 crore; key details

By Admin

04 Jun, 2025

YES Bank is once again in the spotlight as its board announces a significant capital-raising initiative aimed at strengthening its financial position and supporting long-term growth. The private sector lender plans to raise up to ₹16,000 crore through a combination of equity and debt instruments, marking a strategic move to optimise its capital structure.

Strong Monthly Gains, Annual Dip

Despite a sharp 10% decline in share price on Tuesday—closing at ₹20.95—YES Bank shares have witnessed an 18.16% increase over the past month. However, on a year-on-year basis, the stock is still down by 4.12%, reflecting the bank’s ongoing challenges and market volatility.

₹16,000 Crore Fundraising Plan

The fundraising plan includes:

• Equity Securities: Up to ₹7,500 crore, with a cap on dilution to ensure it does not exceed 10%. This includes any potential conversion of convertible instruments, reinforcing YES Bank’s commitment to safeguarding shareholder value.
  
  

• Debt Securities: Up to ₹8,500 crore through eligible instruments issued in Indian or foreign currencies. These may be released in tranches both domestically and globally, supporting capital management and regulatory compliance.
  
  

This dual-pronged approach is subject to shareholder and regulatory approvals and is aimed at enhancing YES Bank’s capital adequacy and growth potential.

Denial of Acquisition Rumours

The recent stock dip was triggered by media reports speculating that Sumitomo Mitsui Banking Corporation (SMBC) was in talks to acquire a controlling stake in YES Bank. However, the bank firmly denied these claims. It stated:

“The bank is not privy to discussions in relation to matters stated in the article. Further, references to the Bank having 'road map' discussions with the RBI are factually incorrect.”

The bank assured stakeholders that it would disclose any material developments in line with Regulation 30 of the SEBI Listing Regulations.

Strategic Partnership with SMBC

Despite the denial of acquisition talks, a major development is underway. On May 9, 2025, a purchase agreement was signed between YES Bank, SMBC, and SBI. This deal involves the sale of a 20% stake by SBI and seven other private lenders to SMBC for ₹13,482 crore. The agreement is still awaiting approval from the Reserve Bank of India (RBI) and YES Bank's shareholders.

This move is part of a broader strategic roadmap and aligns with YES Bank’s reconstruction scheme initiated in March 2020. SBI is expected to retain a significant stake exceeding 10%, ensuring continued institutional support.

Shareholder Rights and Strategic Alignment

The agreement also introduces changes to YES Bank’s Articles of Association, incorporating rights for SMBC and SBI. These rights are structured with fall-away thresholds at 10% and 5%, respectively, ensuring that strategic control remains proportionate and aligned with shareholding levels.

Road Ahead

YES Bank’s fundraising plan, in combination with its strategic collaboration with SMBC, marks a critical phase in its journey. The bank aims to leverage SMBC’s global expertise for operational growth, improved profitability, and long-term value creation. The planned capital infusion, regulatory adjustments, and shareholder alignment collectively reflect YES Bank’s commitment to rebuilding its stature in the competitive Indian banking landscape.

As the bank awaits necessary approvals and proceeds with its strategic roadmap, investors and stakeholders will closely monitor developments that could shape the next chapter of YES Bank’s revival story.