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Malaysia's Khazanah Exits Yes Bank At Over 2x

17 August, 2016

Malaysian sovereign wealth fund Khazanah Nasional Berhad has made approximately 2.3 times its investment in Yes Bank by selling its entire holding of 4.17 per cent on Monday.

The shares were sold through a bulk deal at 1.2 per cent discount to the stock price on Friday, which means at Rs 360-362 a share, a person with direct knowledge of the matter said. The fund made around Rs 530 crore on its investment.

On Monday, the stock price closed 0.11 per cent down at Rs 364.70 a piece.

Apart from buying the stakes of ChrysCapital and Citi Venture Capital International (CVCI) in the bank, Khazanah had also bought smaller amount of shares between April and June 2010, bringing its total holding in the youngest private sector bank to 4.17 per cent. This was around the same time when Rabobank reduced its stake in Yes Bank by selling 11 per cent for an estimated Rs 990-1,000 crore ($210 million). The overall purchase cost for Khazanah will be Rs 230-232 crore, as per VCCircle estimates.

According to the stock exchange filing in December 2011, Titiwangsa Investments Mauritius Ltd held 14.67 million shares in the bank. Khazanah had also invested in IDFC Ltd, an infrastructure-focused lender in the country. It first invested in IDFC in 2007 and then in another tranche in 2010. Khazanah holds around 9 per cent stake in the lender, besides a small stake in L&T Finance Holdings.

Yes Bank confirmed the stake sale in a release to the media. Rana Kapoor, founder, MD & CEO, said, “The approximately $110 million transaction at market price, represents strong investment appetite for Yes Bank, reinforcing our resilient business and financial model and significant future growth opportunities.”

According to a report by Nomura Equity Research on 1 March, there are concerns over the lender’s current account savings account ratio or CASA. “Despite an impressive track record over the past few years, we believe that Yes Bank will face an uphill course in the next one-two years. While Yes Bank has started to focus on CASA, savings deposit accretion is a long gestation process,” the report, which put a neutral call on the stock, stated.

Current RBI regulations, which require mandatory branch additions outside the CASA-rich metro and urban areas, heavily tilt the scales against a rapid growth in CASA per branch, which was possible for some of the earlier private sector banks such as HDFC Bank and Axis Bank.

“Despite the increase in its savings deposit interest rate, Yes Bank is unlikely to realise significant market share gains. While a higher savings deposit rate is ensuring increased customer acquisition for Yes Bank, we believe that the strengthening of these new relationships will take some time. A slow CASA growth could curtail the super-normal loan growth rates enjoyed by Yes Bank going forward, in addition to increasing the cost ratios,” the report said.


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Malaysia's Khazanah Exits Yes Bank At Over 2x

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