Yes Bank is looking to raise ₹10,000 crore through FPO – with Kotak Securities, Axis Capital, and SBI Capital reportedly to be key players

• Yes Bank is looking to raise up to ₹10,000 crore via a follow-on public offer, reports said.
• The FPO will allow Yes Bank to meet its capital requirements, as the troubled bank looks to survive the double blow of the Rana Kapoor money laundering case and the COVID-19 pandemic.
• Going the FPO route allows Yes Bank to avoid borrowing at an increased cost after its AT1 funds were permanently written down by the Reserve Bank of India (RBI).

Yes Bank is gearing up to raise up to ₹10,000 crore via a follow-on public offer (FPO). The FPO is scheduled for some time in the first half of June and Kotak Securities, Axis Cap, SBI Cap and Citi are reported to be amongst the key players.

According to a CNBC TV18 report, the Yes Bank FPO is expected to be in the range of ₹8,000-10,000 crore. This comes after Yes Bank’s losses ballooned to ₹16,418 crore and its deposits worth ₹1.2 lakh crore have vanished.

Yes Bank’s Managing Director and Chief Executive Officer Prashant Kumar told Livemint in May that the bank is looking to raise up to ₹10,000 crore via FPO, rights issue or qualified institutional placement (QIP).

Last month, the Securities Exchange Board of India (SEBI) relaxed fundraising restrictions for stressed companies. The relaxation was in the form of reduced minimum subscription requirements – from the 90% required earlier, this has reportedly been reduced to 50% now.

The beleaguered bank has seen its shares plummet from ₹393 in August 2019 to an all-time low of ₹5.65 in March 2020. The bank’s shares tumbled when news broke that the Reserve Bank of India (RBI) was taking over.

The bank’s managing director at the time, Rana Kapoor, is currently being investigated for money laundering to the tune of ₹4,300 crore.

What is an FPO?

FPO, short for follow-on public offer, is a subsequent issuance of shares to the public, after the initial public offer (IPO).

FPOs are generally undertaken to either raise equity or reduce debt.

Yes Bank going the FPO route is likely a result of the bank’s AT1 bonds being written down by the Reserve Bank of India (RBI). As a result of this writedown, there were concerns that the overall cost of raising bonds would increase.

Going the FPO route allows Yes Bank to raise funds without having to worry about the increased cost of borrowing.

SEE ALSO:

The fall of Yes Bank founder Rana Kapoor from a billion dollars to facing a ₹4300 crore investigation

Yes Bank fears more deposits may disappear when COVID-19 moratorium ends and people start repaying loans

Yes Bank creates stressed asset management vertical to resolve NPA accounts