Mid-sized Indian private-sector lender Yes Bank has raised $225 million through a placement of shares with institutions, as it seeks to boost loan growth by 50 percent over the next two years.
Managing Director Rana Kapoor told television channel CNBC TV18 on Thursday the size of the offering was raised from an initially planned $150 million due to strong demand from global investors.
“With good response from long holding investors in U.S., Europe and Asia, we have upsized the deal at $225 million and closed it at that,” he said.
Kapoor said the sale was priced at 269.50 rupees a share and represented an equity dilution of 11.25 percent. The price was at a discount of 1.2 percent to the stock’s closing on Wednesday.
Shares in Yes Bank, which has a market value of $1.8 billion, were trading down 2.8 percent at 265 rupees at 0720 GMT in a Mumbai market down 0.9 percent.
“Credit growth is starting to pick up, which will benefit Yes Bank,” Manish Sonthalia, fund manager with Motilal Oswal who oversees assets of $180 million.
“The bank is growing at about 25 percent and currently trades at 2.5 times its FY11 earnings … so it is not overvalued and there is further scope for upsides,” he said.
Kapoor said the funds would be used to accelerate loan growth by a half over the next two years. The 5-1/2-year-old bank aims to boost lending to retail and medium businesses to 30-35 percent in five years from 4 percent now.
At the end of December, the bank’s total loan portfolio stood at 187 billion rupees ($4 billion), up 71.1 percent from a year earlier. Large companies accounted for 72 percent of the bank’s loans.
The bank may start a private equity venture in the next financial year.
“It’s early days for a private equity fund. May be in the next fiscal we would be looking at launching Yes Ventures, our private equity initiative,” Kapoor said.