Sunil Munjal, chairman of Hero Corporate Services Ltd, and Hemendra Kothari, veteran investment banker and founder of DSP Group, are in talks with the Yes Bank Ltd to buy the stakes of 5-10% each in the cash-starved private lender, three people aware of the matter said.
As per the sources, both of these businessmen have shown their interest and desire to invest following discussions over the past fortnight. The sources who asked to ot reveal their name, also said that if the bank will deal with both investors successfully, then it may receive a total of up to ₹3,500 crore.
“As per the discussions, the investment is likely to be done through the family offices of Munjal and Kothari. Both investors are willing to buy up to 10% (each), but the Reserve Bank of India’s approval will be crucial,” said the first person.
“He (Kothari) may try to buy 10% for ₹1,600 crore. The investment has to be cleared by RBI,” said the second person. Munjal may also invest an equal amount for a similar sized stake, the person added.
It is required to take approval from the RBI for any kind of stake purchase of 5% or more in a banking company.
The second person confirmed that the Kothari’s family office has appointed Mumbai-based Arpwood Capital as the banker-cum-adviser for the deal.
The third source said that Munjal is in talks with the Yes bank from last few months for this deal.
“Apart from Yes Bank, Munjal is looking for other possible investments as well in different financial institutions and startups, especially in the mobility space. Through all these investments, he is eyeing a minority stake where he will not be involved in the management of the particular entities. After his exit from Hero MotoCorp, he has funds available which he wants to invest in different institutions, of which Yes Bank is a part. Most of these investments are likely to be made through his family office,” said the third person.
Last year, Munjal had tried to bid for Fortis Healthcare Ltd, for which Burman Family of Dabur was also in the row, However the deal was unsuccessful.
Apart from Munjal and Kothari, An US-based private equity giant Carlyle Group has shown interest to make an investment of $400 million in Yes Bank through a fresh equity issuance, said the first person.
However, on this information spokesperson of Yes Bank and Kothari’s office have declined to comment. Also, there has been no reply to the emails sent to Hero Corporate Services and the Carlyle Group.
In the coming quarters, Yes bank have created enough buffers about the provision against bad loans due to the extreme desperation to get investors within the compliance of RBI’s capital adequacy norms.
As of the September quarter, Yes Bank’s tier I capital adequacy ratio stood at 11.5% against the regulatory requirement of 8.875%. Its common equity tier 1 capital stood at 8.7%, marginally above the regulatory requirement of 7.375%.
Till now, The bank has tried to deal with around half-a-dozen large private equity firms and about a dozen foreign family offices
On 14 August, Yes Bank raised $270 million through a qualified institutional placement. The lender has been dealing with a surge in doubtful loans over the past few quarters.
Yes Bank, on 31 October, claimed that it has got a $1.2 billion binding offer for investment from a global investor.
On 4 November, billionaire investor Rakesh Jhunjhunwala also purchased 13 million shares of Yes Bank for ₹87 crore from the open market.
Even after the loss of Rs 600 crore in the september quarter, the Bank’s shares have shown rising trends most of the time.
On Monday, the stock surged 6% to ₹73 apiece on BSE, taking the bank’s overall market gains to 150% in the last 26 sessions.