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Indian Economy

Notes Its investment bankers helped stitch up the second largest Indian cross-border acquisition,
when Pune-based Suzlon, the world’s fifth largest wind turbine maker acquired Belgium-
based Hansen Transmissions International NV, the world’s second largest wind turbine
gearbox maker, for $560 million. The other major overseas M&A deal it was involved was
of United Phosphorous, which acquired Advanta Netherlands Holding BV for almost $120
million. Leading international financial data and news provider, Bloomberg, recently
ranked Yes Bank No 1 in the M&A Outbound cross-border transactions category, and No
5 in the M&A “overall” category.
The focus of its corporate division is on knowledge-driven banking. The bank has built up
specialized domain knowledge and understanding in some key sectors, including food
and agribusiness, life sciences, telecommunications, media and technology, infrastructure,
and select manufacturing industries including textiles. The bank has recruited ‘technocrat
bankers’ – with engineering and MBA backgrounds – who can offer in-depth insights into
these sectors to its clients. The bank has also invested considerably in its treasury practise
and aims to ultimately emerge as a rupee bank.
In the corporate finance segment, Yes Bank’s strengths are in structured lending
programmes, long-term funding for infrastructure projects, funding of acquisitions, and
financial restructuring. One sure-fire segment of the corporate world, offering tremendous
potential for growth, is “Emerging Indian companies”. Yes Bank hopes to play the role of
‘money doctor,’ providing a 360-degree approach, thanks to its domain knowledge and
expertise in specific fields. Many of these mid-size companies have overseas expansion
ambitions, and Yes Bank will be there to help them in acquiring other firms, or setting up
overseas operations. The bank will of course also be catering to large companies (with
turnover exceeding $100 million), and small and medium enterprises (in the $1 million to
$10 million bracket).
Like other PSU and Private Banks, Yes Bank is also focusing on retail sector, but its retail
focus will be on owners of tiny businesses and firms in the unorganized sector, and
affluent individuals with incomes exceeding $10,000 annually. There are about 12 million
households in this category in India. Some can be found outside the metros and large cities
and state capitals.
The Yes Bank believes that despite the growing emphasis on the retail sector, there is vast
room for improvement in service standards. The bank, which has entered into alliances
with best-of-breed technology partners – and has won awards from AC Nielsen (for
Technology Innovation) and the National Association of Software and Service Companies
(for IT innovations in Emerging India) – aims “to create a delightful experience” for its
customers, and fill “the missing link” in the Indian banking sector.
The bank also offers wealth management services to both resident high net worth
individuals and for ‘global Indians’. Besides expanding its domestic network, Yes Bank
does hope to emerge as a global bank – with a strong presence in countries with a significant
ethnic Indian population. But in its first phase of expansion, it focused predominantly on
building a strong home-country bank. With a critical mass of Indian companies expanding
overseas into Europe and South East Asia, there is strong need for advisory services from
Indian banks, and a very compelling case for their overseas presence.
Questions
1. Discuss the Yes Bank’s strategy to grow.
2. Explain how Yes Bank is capitalizing on the changing environmental factors.
Source: Business Environment, Dr Vivek Mittal, Excel Books; “Wireless Banking getting nod”,
www.Intel.com./casestudies/yes_bank.pdf

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