Yes Bank FPO through even as subscription falls short of Rs 15,000 cr-mark

follow-on public offering (FPO) went through with the subscription crossing the mandatory 90 per cent mark, but the total demand fell short of the Rs 15,000 crore-mark. The FPO generated bids for 8.5 billion shares—93 per cent of 9.1 billion on offer, data provided by stock exchanges as on 6pm showed. If the FPO is priced at the lower-end of the Rs 12 to Rs 13 per band, the lender will be able to mop up Rs 14,270 crore, after including the Rs 4,100 crore worth of shares allotted to anchor investors on Tuesday. was aiming to raise Rs 15,000 crore through the share sale to support growth and bolster its capital adequacy ratio.

SBI Capital Markets had underwritten the FPO to the tune of Rs 3,000 crore. It couldn’t be ascertained if this will help cover the Rs 730-crore shortfall or the investment bank already applied for the underwritten amount in the FPO.

SBI Capital Markets, which had underwritten the FPO to the tune of Rs 3,000 crore, will make up for the Rs 730-crore shortfall in demand.

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Bulk of the demand for the shares came from institutional investors, including State Bank of India, Life Insurance Corporation and Tilden Park Capital.

IIFL, HDFC MF, Union Bank, Bajaj Holdings, Avendus, Norges Fund, and Jane Street Capital are some of the investors who subscribed to shares in the FPO, said sources.

The institutional investor portion of the FPO garnered nearly two times subscription. Including the anchor investment, institutional investors poured in nearly Rs 10,400 crore in the FPO.

On the other hand, the response from individual investors remained tepid. The high-networth individual (HNI) investor portion of the FPO was subscribed 63 per cent. Retail and employee portion also remained undersubscribed at 46 per cent and 32 per cent, respectively. Investment bankers said they were still processing some retail applications.

Shares of Yes Bank ended at Rs 19.8, up 2.9 per cent on Friday. While the shares were available at a 40 per cent discount in the FPO, many investors stayed away fearing that the large dilution will depress the secondary market price.

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Through the FPO, Yes Bank will issue over 12 billion fresh equity shares—almost equal to its current equity base of 12.55 billion shares.

In March, as a part of the rescue plan, Yes Bank had received Rs 10,000 crore equity infusion from eight financial institutions led by SBI. These investors were allotted shares at Rs 10 per share. SBI had invested Rs 6,050 crore and got 48.2 per cent stake (pre-FPO basis). SBI had obtained board approval to invest another Rs 1,750 crore in the FPO. Sources said most of the eight financial institutions who invested in March also applied in the FPO to prevent dilution of their stake.

Some analysts had raised doubts on whether Rs 15,000 crore would be enough as growth capital. “Capital potentially being used to meet regulatory requirements, make provisions and pay employee salaries – not for growth,” Macquarie had said in a note on July 10.

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