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Private sector lender Yes BankNSE -7.90 % has successfully raised $275 million by selling shares to a clutch of domestic and foreign investors in a qualified institutional placement (QIP) that closed early morning on Friday. This capital raised has averted a crisis at the lender for now, but it may need more funds later this fiscal.
The issue which opened after trading hours on Thursday was subscribed three times and will improve the bank’s capital adequacy ratio by 55 to 60 basis points. One basis point is 0.01 percentage point. The bank’s core Tier I capital ratio will improve to 8.55-8.60% from 8% reported in June 2019, giving the bank some headroom over the mandatory 8% Tier I it has to maintain by March 2020.
We had a mandate to dilute not more than 10% equity in the bank and we have stuck to it. The issue received a good response in challenging times and we saw demand from both domestic as well as international investors,” said a person directly aware of the deal.
Domestic investors who participated in the QIP were HDFC Mutual Fund and Aditya Birla Mutual Fund, among others. Foreign funds included UK’s Ashmore Investment Management, Tosca Asset Management and Marshall Wace LLP, while Hong Kong-based Segantii Capital Management also subscribed to the issue, said a second person aware of the deal.
Capital is precious for the bank as its core Tier I capital ratio declined to 8% in June 2019, precariously close to the minimum regulatory requirement of 7.375% for March 31, 2019, and 8% for March 31, 2020.
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