yes bank share sale, yes bank public offering, yes bank to plan $1 billion share sale

Yes Bank is aiming to launch IPOs (Initial Public Offering) worth Rs 80 billion to raise its tire-1 capital ratio to 10 percent from existing 6. 3 percent. News floated in the market that the bank is looking to raise public funds to reinforce its capital position. 

It’s worth mentioning that the bank’s shares tanked in March after a severe deterioration in its financial condition, which led RBI to impose a moratorium. But since, Yes Bank has recovered some of the lost ground and received capital infusions from top banks like SBI and HDFC. Currently, Yes Bank shares are selling at 73 percent higher than its March month’s price. The bank has received Rs 100 billion capital assistance from its eight lenders who have helped it to repair its capital position and meet customer commitment. 

Details of the deal are yet to surface since the decision is still pending from bank’s side, said an undisclosed source. There could be further changes in the policy and process before the final announcement is made. However, Yes Bank CEO, Prashant Kumar in March said that his bank aims at raising Rs 150 billion to solidify its financial condition and might issue shares or convertible bonds to fulfil its target. $1 billion share sale plan by Yes bank is a part of its efforts.

Some historical background

Yes Bank Limited was established in 2004 as a public bank by founders Rana Kapoor and Ashok Kapur. It obtained a license from RBI to offer a complete range of banking products to public and corporate and operate as a full-fledged bank. Between 2004 and 2015, it was one of the fastest-growing banks in India. However, this year in March, RBI took action against the bank and superseded Yes Bank Board of Directors for 30 days following rising concerns over its asset qualities. It put the bank under moratorium and capped withdrawal limit to Rs 50,000. Following the incident, Yes Bank’s performance dipped across the exchanges. 

A revival plan was proposed to maintain stability in the Indian financial sector. And as a result, Yes Bank received funds from eight local lenders, led by SBI to rebuild its financial capacity. 

What it means to you as an investor

Currently, the market condition is volatile, caused by COVID-19 outbreak and nationwide lockdown that has put a hold on all economic activities. Investors are looking for safe investment options that are less exposed to ongoing market condition and has the potential to bounce back once the economy reopens. IPOs from technology, pharma, and financial sectors have seen a good response from investors. Whether Yes Bank IPOs will perform well in the market will become clear once more details regarding price and other details surface. But for now, its stocks are doing well, allowing its investors to salvage some of their losses from March.