YES Bank may reject $1.2 billion offer from Canadian investor

At a board meeting on Tuesday, YES Bank is expected to reject an offer from Canada's Erwin Singh Braich and Hong Kong-based SPGP Holdings to contribute $1.2 billion toward the fund raising

Private sector lender Yes Bank is likely to reject an investment proposal of $1.2 billion from SPGP Holdings and Canada's Erwin Singh Braich, which accounts 60 per cent of its planned $2 billion capital raising, Bloomberg reported. The cash-strapped lender is also in talks with institutional investors to make up the shortfall, as per the report.

At a board meeting on Tuesday, the bank is expected to reject an offer from Canada's Erwin Singh Braich and Hong Kong-based SPGP Holdings to contribute $1.2 billion toward the fund raising, Bloomberg quoted a source as saying. Analysts had raised concerns over credibility of the lead investor, Erwin Singh Braich and SPGP. Report suggest that Erwin Singh Braich and SPGP was not even able to pay up Rs 2 crore for earnest money to convey its seriousness in buying the sick apparel maker Reid & Taylor (R&T) in January this year. The analyst at Angel Broking opined that the private sector lender will not get the RBI's nod for the huge stake sale with investors who are not institutional and have questions on their credibility.

Meanwhile, the board of directors of YES Bank will meet on Tuesday to decide on the details of the preferential allotment of shares and convene an extraordinary general meeting subsequently to obtain the approval of the shareholders for raising capital.

Also Read: YES Bank to raise nearly $2 billion through preferential share allotment; board to meet on Dec 10

YES Bank, which is in desperation to raise capital to meet the RBI's norms, said last month that its board approved a decision to raise $2 billion through preferential allotment of equity shares to eight investors, which include foreign and domestic entities. The family office of Erwin Singh Braich/SPGP Holdings had committed to invest $1.2 billion, while US-based Capital International has announced to invest at least $120 million in the bank.

SPGP Holdings had committed to invest $1.2 billion, while US-based Capital International has announced to invest at least $120 million in the bank.

Also Read: Moody's downgrades YES Bank ratings ahead of fund raising plan

The other parties who showed willingness for fund infusion were GMR Group and Associates ($50 mn), billionaire investor Rakesh Jhunjhunwala's wife Rekha Jhunjhunwala ($25 mn), Aditya Birla Family Office ($25 mn) and Citax Holdings Ltd & Citax Investment Group ($500 mn).

Ahead of the board meeting, YES bank share price closed 0.36 per cent higher at Rs 56.20 apiece on the Bombay Stock Exchange on Monday.