IFC lending $125M to Yes Bank

Yes Bank is raising $125 million in debt funding from International Finance Corporation (IFC), the private sector investment arm of the World Bank Group, to lend more to micro and small & medium enterprises (MSME and SME) besides plugging the maturity mismatch in its portfolio.

This involves a 5-7 year senior loan of $60 million from IFC’s own account and a syndicated loan of $65 million.

IFC's loan will support the bank in providing access to finance to the SME portfolio, accessing long-term funding and diversifying its funding base franchise; improving its maturity mismatch position and growing its assets, increasing its reach and improving its market share, especially in the SME and MSME space, as per a disclosure by IFC.

Yes Bank and IFC have previously partnered to explore investment opportunities in the North East, especially to support the SME sector.

Founded in 2004, Yes Bank is the fourth-largest private sector bank in India after ICICI Bank, HDFC Bank and Axis Bank. It has an asset base of $18 billion in FY13 with network of over 500 branches spread across 350 cities with more than 1,100 ATMs.

Its loan book has been growing at a CAGR of 38 per cent over the last five years and it has diversified and increased its SME and retail portfolio, which presently comprises 36 per cent of its loan book. As part of its strategy, the bank aspires to increase the proportion of the SMEs portfolio to 50 per cent over the next five years.

It was started by Rana Kapoor and his late partner Ashok Kapur along with Rabobank International. Over a period of time the bank has raised several rounds of equity.

Large institutional shareholders include LIC, JP Morgan Funds, Bajaj Allianz Life Insurance, Morgan Stanley Asia (Singapore), Government Pension Fund Global, Reliance Life Insurance, Merrill Lynch Capital Markets Espana S.A. S.V and Franklin Templeton Investment Fund. Recently, Norwest Venture Partners also picked a small stake in Yes Bank through an open market transaction.

In September this year, Yes Bank raised $255 million from overseas through a dual currency, multi-tenor syndicated loan facility.

(Edited by Joby Puthuparampil Johnson)

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