Shares of YES Bank gained nearly 5 per cent in an otherwise volatile market today after the board of private lender cleared the sale of a stressed loan portfolio of Rs 48,000 crore to asset reconstruction company JC Flower ARC. The plan for sale of NPAs to JC Flower pushed the stock higher in the current trading session. The RBI clearing appointment of Former RBI Deputy Governor R Gandhi as a part-time chairman of YES Bank also boosted sentiment around the stock.
YES Bank stock climbed 4.87 per cent to Rs 17.20 against the previous close of Rs 16.40 on BSE today. YES Bank shares are trading higher than 5-day, 20-day, 50-day, 100-day and 200-day moving averages. Stock of YES Bank has gained 29.62 per cent in a year and risen 23.08 per cent in 2022. In a month, the stock has gained 1.75 per cent. Total 85.24 lakh shares of the firm changed hands amounting to a turnover of Rs 14.47 crore on BSE. Market cap of the bank climbed to Rs 42,343 crore in early trade today.
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JC Flower was finalised for sale of NPAs after the bank received no further bids for the stressed loan portfolio. The bank had earlier declared JC Flowers Asset Reconstruction Private Limited as the base bidder for the proposed sale. This is said to be the largest sale of stressed assets in domestic markets.
YES Bank will buy 20 per cent stake in the ARC for Rs 350 crore, according to the term sheet signed with JC Flowers. Additionally, the lender announced appointment of R Gandhi as part-time chairman.
“We are pleased to inform that as recommended by the Board of Directors of the Bank, the Reserve Bank of India has approved the appointment of Mr. Rama Subramaniam Gandhi as the Non-Executive (Parttime) Chairman of the Bank for a period of three (3) years effective from today i.e. September 20, 2022,” the bank said.
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In the beginning of August, board of the bank approved raising of Rs 8,898 crore from funds affiliated with private equity investors Carlyle and Advent International. Both the funds will potentially own 10 per cent each in the private lender.
The amount of Rs 8,898 crore will be raised through a combination of Rs 5,100 crore in equity shares and Rs 3,800 crore through equity share warrants.
ICICI Securities had expressed a positive stance on the proposed capital raise by the bank.
“The proposed equity raise will provide confidence as well as growth capital to scale up RoA to targeted levels. We see a turnaround in relevant operating metrics and improved confidence in the stability of the franchise. With benefits of likely credit rating upgrade and optimal capital utilisation with improved growth profile, it is unlikely to be earnings or return on equity dilutive. An incremental trigger will be transfer of bulk of the bank’s stress pool to asset reconstruction company having signed a binding term sheet with JC Flowers ARC(Link),” said ICICI Securities.
Meanwhile, Indian equity benchmarks traded lower on Wednesday in opening deals, pausing two straight sessions of gains as investors braced for another aggressive interest rate hike from the US Federal Reserve. Sensex fell 126 points or 0.21 per cent to trade at 59,593, and Nifty lost 39 points or 0.22 per cent to 17,777.