Yes Bank is one of the prominent private lenders that has announced a decision to raise funds from the capital market following the footsteps of HDFC Bank, Kotak Mahindra, ICICI Bank, and Axis Bank. The bank on Thursday said that it has filed with the exchange to issue follow-on public shares to raise Rs 15000 crores.
The private lender has already received a revival package of Rs 100 billion from SBI and seven other lenders after RBI imposed a moratorium on it in March. Yes Bank shares are currently trading high and rallied nearly 2.50 percent on Thursday after the announcement. It traded at Rs 26.75 during early trade.
What is a follow-on offering?
Follow-on offers refer to the issuance of additional shares following a company’s IPO (initial public offering) share launch. In IPOs, the share price is based on the company’s financial performance, whereas follow-on offering share prices depend on market demand. Usually, FPO is offered at a discounted rate to the current closing price of the share. In the case of Yes Bank FPO, the price fixed at Rs 12, which is 55 percent less than its previous day’s closing value.
Diluted and non-diluted – FPO share is of two types. It is called diluted FPOs when the company issues new shares in the market, which lowers its earning’s per share (EPS) value. On the other hand, for non-diluted FPOs, EPS remains unchanged.
Yes Bank, early this year, struggled with depleting capital cushion and came under review by the central bank and regulator RBI. The bank was then taken over by SBI and received a new lease of life with Rs 100 billion capital infusion. In June, Yes Bank issued IPO shares to bolster its capital base. Capital raised from FPO launch will reconstruct its capital base and help it tide through the present time.
Yes Bank FPO offer will launch on July 15 and remain open till July 17. SBI, the prime lender of Yes Bank has pledged a fresh investment of Rs 1,760 crore through FPOs. SBI currently holds a 48.2 percent stake in the bank.
Yes Bank employees can also take advantage of the forthcoming FPO scheme. The bank has decided to reverse up to Rs 200 crore worth of shares for its employees.
The minimum bidding volume for retail investors will be 1000 shares at the rate of Rs 12, which means the minimum investment amount will be Rs 12,000. For employees, it will be Rs 11,000. Bidding for anchor investor will be held on July 14 before the scheme opens for general investors.
Recently the bank has targeted to rebuild its capital base with the new launch of shares. Already it has taken steps to raise the tier-1 capital ratio to 10 percent from 6 percent. It has retrieved some of the lost ground since it was put under moratorium in March. Axis Capital, Kotak Mahindra Capital, Citi, and Bank of America are advising Yes Bank in FPO share launch.