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    YES Bank FPO manages to sail through, subscribed 93% on day 3

    Synopsis

    The issue attracted bids for 8,47,12,49,000, which was 93 per cent of the issue size of 9,09,97,66,899 shares. For an FPO to sail through, a minimum of 90 per cent of the issue needs to be subscribed.

    Reuters
    YES Bank had fixed a price band of Rs 12-13 for the public issue.

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    NEW DELHI/MUMBAI: Private lender YES Bank's Rs 15,000 crore follow-on public offer (FPO) saw 93 per cent subscription by end of Day 3, the last day of the bidding process.

    By 7 pm, the issue attracted bids for 8,47,12,49,000, which was 93 per cent of the issue size of 9,09,97,66,899 shares, data compiled from NSE suggests.

    For an FPO to sail through, a minimum of 90 per cent of the issue needs to be subscribed. The bank had earlier entered into an underwriting agreement with SBICap, wherein the latter agreed to underwrite Rs 3,000 crore at a price equal to or the lowest end of the price band. This in YES Bank's case is Rs 12.

    “The issue has sailed through because it has been subscribed more than 90 per cent plus Rs 3,000 crore have been underwritten. Somehow, institutions seem to be having more faith in YES Bank than individuals. That parameter requires a thought,” said independent market expert Ambareesh Baliga.

    “However, the silver lining is that there won’t be too much selling when these shares get listed, as generally HNI (high net worth individuals) and retail investors buy for listing gains,” he added.

    While YES Bank’s FPO just managed to sail through, Rossari Biotech’s initial public offer (IPO) saw a very robust response earlier this week implying that there was ample liquidity and interest in the market. Rossari Biotech’s IPO was subscribed more than 79 times.

    YES Bank had fixed a price band of Rs 12-13 for the public issue. At the upper end of the price band, the FPO demands an adjusted price-to-book value of 0.85 times. Other banks trading at similar valuations are IDFC Bank (0.9 times), SBI (0.5 times core banking business) and Federal Bank (0.9 times).

    On Tuesday, the bank raised nearly Rs 4,100 crore through anchor allotments ahead of its follow-on public offer’s opening. It allotted 3,41,53,84,614 equity shares to a total of 14 anchor investors. More than half of the anchor book was subscribed by Bay Tree India Holdings.

    "Our concern for YES Bank is fresh formation of bad loans that would keep provision highs and return ratio compressed for a longer time. Retail deposit is key for any bank for lower cost of funds. But YES Bank has witnessed sizable withdrawal of deposits over the past two quarters," Angel Broking said.

    "Rebuilding Casa and deposits is a challenging task and would take time. Overall, the bank will take longer to revive and build a decent RoE number. Considering these factors, we recommend a 'neutral' rating on the FPO," said Angel Broking.

    Nirmal Bang Institutional Equities said as the bank has reduced rates, attracting sizable retail deposits could remain a challenge for some time given the recent 'episodes’.

    "Therefore, rebuilding of the liabilities shall remain one of the key monitorables. Overall, we think that the near term performance is unlikely to be enticing enough to attract any meaningful interest from institutional investors. Also, given the broader valuations in the BFSI basket, we think there are other investment opportunities available that offer higher visibility, lower stress baggage and an overall better franchise," it said.

    This brokerage had an 'avoid' rating on the FPO.

    "While we agree that the issue is priced cheaply, the valuation should be seen in context of the uncertainties, the likely stress and overall (poor) financial performance that is expected in the foreseeable future," Nirmal Bang said.

    Kotak Mahindra Capital Company, SBI Capital Markets, Axis Capital, Citigroup Global Markets India, DSP Merrill Lynch, HSBC Securities and Capital Markets (India), ICICI Securities and YES Securities (India) were the book running lead managers appointed to the issue.
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    3 Comments on this Story

    Manish Upadhyay57 days ago
    I dont understand why people go for this YES or NO bank. Go with SBI or something better. Greed is really bad. Invest in Congress Potato factory,
    "Idhar sae Sonaa daaloou udhar sae aloo kae chips niklaeyngae"
    Suresh Kamath67 days ago
    YES it was a sheer escape by a Whisker for this FPO of YES BANK and solid backing from Institutions and BANKS which help SAIL through and hope Funds raised would be well utilized for the GROWTH of the YES BANK and bring some Confidence to the Depositors and Clients to Serve them well again after the earlier Promoters GREED got the better of them and LOST what they AMASSED at the cost of Shareholders /stakeholders/Customers of this YES BANK
    Govind Gaur67 days ago
    The big obstacle is over & now it is the time to give justice to honest depositors particularly to retired one who were cheated by employees of YES BANK incase of AT1 Bonds. They approched them & evidences are available against the affidavit filed that these retired personal never came in contact with their employees & have directly purchased from secondary market. Even in some cases cheques were filled by YES BANK EMPLOYEES taken fraudently in order to purchase these bonds without their knowledge. This needs to examine why this has happened? WHY YES BANK Employees took so much interest in canvassing by telling them this product is much safe & superior to FDR having maturity date. This will definitely restore confidence of depositors.
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