India-based private sector lender Yes Bank is reportedly planning to sell a major part of its wholesale loan book in Warora Kurnool Transmission (WKLT) to its largest investor State Bank of India (SBI).
The troubled lender intends to raise as much as INR7bn ($932m) by selling its wholesale loan book to boost its liquidity, Livemint has reported.
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The move comes after Yes Bank raised INR32bn ($4.26bn) by downselling its profitable loan facility in Australia-based Macquarie group subsidiary ‘Safeway Concessions’ to SBI.
Macquarie group operates many highway assets in India.
Yes Bank provided an INR50bn loan to Safeway back in 2018 to help the group meet its financial obligations such as paying INR96.81bn to National Highways Authority of India.
Out of Safeway’s entire debt portion, ICICI agreed to take over a portion of the debt worth INR20bn.
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By GlobalDataBy downselling its exposure in WKLT and the remaining debt portion in Safeway to SBI, Yes Bank can shrink its wholesale loan book, which represents 55.9% of its entire loan book of INR1.7trn.
One of the sources said: “Yes Bank is looking to reduce its loan book by selling some of these exposures. However, it is not looking at many transactions.”
According to Livemint, the fundraiser will help the cash-starved bank increase its capital adequacy ratio which currently stands at 8.5%.
Similarly, acquiring these loan exposures will help SBI to grow its loan book, which has been impacted by the Covid-19 pandemic.
A second source told Livemint that: “The state-owned bank is eyeing high-rated customers to refinance a portion of its debt. Toll Operate Transfer (TOT) is an AA-rated account and that gives some confidence to SBI to take over these loans.”
Currently, Yes Bank is preparing for its previously announced follow-on public offer (FPO) worth INR150bn, which scheduled for launch in mid-July.
