Hinduja Group has entered the race to invest in Yes Bank as part of a consortium, sources told CNBC-TV18. The group is looking to join hands with Cerberus and JC Flowers to buy a minority stake of up to 10 percent in the bank, they added. However, Hinduja-owned IndusInd Bank is not involved in the transaction, the sources, who did not want to be named, clarified.

According to the sources, who have direct knowledge of the matter, the investors have reached out to RBI to seek dispensation on the pricing of the deal. "Valuation has to be much lower than the current market price, we are not keen at this price, it does not correctly reflect the asset quality concerns," said an investor on the condition of anonymity.

Hinduja Group may be exploring an investment opportunity via its group entity IIHL (IndusInd International Holdings Ltd). Since the group owns IndusInd Bank, the RBI rules restrict it to own more than 10 percent stake in another bank.

"IndusInd Bank is not involved in the said transaction and Hinduja Group may look at it as a financial investment as part of a group of investors," one of the sources said.

Hinduja Group officials were unavailable for comments on CNBC-TV18's query. Yes Bank, Cerberus, JC Flowers also did not respond.

Yes Bank had recently told the exchanges that JC Flowers, Tilden Park, OHA and Silver Point have submitted non-binding expressions of interest to the bank.

Yes Bank is in desperate need of capital to solve for its asset quality-related issue but any investor will have to pass the muster of the RBI's fit and proper approval.

The bank needs capital to meet the growing requirements of its expanding business, to invest in technology, human capital and infrastructure, and because it also envisages significant lending opportunities.

Yes Bank appointed Anshu Jain-headed global investment bank Cantor Fitzgerald and two domestic entities for its fundraising plans, sources had said earlier. Other merchant bankers appointed by the capital-starved lender include IDFC Securities and Ambit Capital, they said.

The lender's board in January decided to not go head with Canadian investor Erwin Singh Braich's USD 1.2-billion offer and also indicated that a USD 500-million offer from Citax Holdings and Citax Investment Group, which was being considered, was facing uncertainty.

First Published:Feb 20, 2020 1:35 PM IST