INSUBCONTINENT EXCLUSIVE:
investors to soothe investor nerves frayed by worries over rising bad loans due to the Covid-19 outbreak and outflow of deposits after the
collapse of Yes Bank.
The private lender, arguably the worst-hit bank stock since the coronavirus outbreak, has mandated Morgan Stanley and
Citi to tap a handful of PE funds, people close to the development added
Global funds such as Blackstone, Apax Partners, General Atlantic (GA), Advent, TPG and Carlyle have been approached
Other bidders are also expected to join
At current prices, 10% of the bank would be valued at Rs 2,373 crore ($320 million) while a 20% dilution would help raise $641 million.
Deal
Size may go UpThe management, therefore, may negotiate an upfront equity infusion through a preferential allotment that happens at a premium
as well as issue warrants at higher prices that get subscribed at a later date.
The plan, according to sources, is to onboard a maximum of
consider.
The talks are, however, preliminary in nature
The deal size might also go up if the stock decline continues, putting more pressure on the promoters
The transaction is similar to the Bain investment in Axis Bank in 2017 that saw the Boston-based PE major lead a consortium to pump in $1.8
billion in the wake of worsening asset quality and regulatory glare.
One of the persons mentioned above said an option being explored
dilution of around 10-20% of the bank
Blackstone, Apax, TPG and Carlyle declined to comment.
Mails to GA, Advent did not generate a response till press time.
ET reported on March
17 that the Hinduja family had also asked the Reserve Bank of India that they be allowed to raise their stake in the bank to 26% from the
mandated 15%, citing the relaxation granted to Uday Kotak, promoter of Kotak Mahindra Bank, recently.
The Hinduja brothers have also
clarified that they have made full repayment of the 2016 loan to Citibank, releasing 23.8 million pledged shares, or 3.43% of current
paid-up capital.
Even though the bank is seeking third-party validation from some of the best names in the business, experts believe it will
Sebi does not allow for banks
Additionally, there has also been a change of management in the bank, said a person directly involved, on conditions of anonymity as the
talks are in private domain
have fallen over 69% in one month and 77% since the beginning of the year.
