Yesterday was a lesson, but will hit back with QIP soon:Yes Bank

Yes Bank on Thursday deferred its USD 1 billion qualified institutional placement (QIP). The management blamed the volatility in the stock for the same. Yes Bank, on Friday, opened 6 percent lower after a 5 percent fall in closing on Thursday. Speaking to CNBC-TV18, Rana Kapoor, MD & CEO of Yes Bank says that “yesterday was a learning lesson” for the company and that the bank will definitely come back with the QIP at a later date. The pricing, which was considered the main reason behind volatility, was well within the SEBI (Securities and Exchange Board of India) guidelines, Kapoor clarifies. The QIP, which will cause 10-11 percent dilution, will be taken out sooner or later and pricing then will depend upon market conditions. Kapoor further adds that it will give investors good returns as was the case with Yes Bank’s previous QIPs. Below is the transcript of Rana Kapoor’s interview to Sonia Shenoy, Anuj Singhal and Latha Venkatesh on CNBC-TV18.Latha: After yesterday’s pull back of your qualified institutional placement (QIP), what are the plans now? How quickly, do you think you will launch it and have you done some dissection? Was it the pricing that you got wrong?A: After we spoke yesterday, I can only share with you that there was a misinterpretation on the period for which the QIP had to be kept open and therefore, there was some uncertainty as a consequence of which there was unusual volatility in the stock. And this is what I reported to you yesterday. We have taken stock of the situation with our bankers and naturally with the Capital Markets Committee of the bank and it is our fullest intention to have a QIP of USD 1 billion sooner than later. Naturally, we will reconvene at some point over the next few days. I would also like to add that we have all the requisite approvals, statutory as well as board and shareholders, to have this QIP and it is valid at least till June next year.Anuj: With all due respect, YES Bank actually is a complete reverse of volatility. That stock has had just one way surge from Rs 700 to Rs 1,400. Could this have been the case of promoters, in a bull market, increasing their expectation of pricing at which the QIP could go through? Could it be a simple case of bull market greed?A: It is a very valid point. If you see the price range which we had proposed in the course of the transaction, it was well within guidelines with the SEBI average price for the last two weeks. So, it is not that we were way out. The second point is that there was a fair amount of demand and literally the book was quite comprehensively filled up in the morning and we had to defer because of the outright and exceptional volatility that kept into the stock and naturally, we want investors to see the upside and not only a downside.Sonia: So, can you give us any kind of indication on when you plan next to come into the market in terms of a timeline?A: All I can say is sooner than later. It is indeed our fullest intent to go ahead with this QIP and we will mobilise all our efforts. We are in a fairly good condition to go ahead with this QIP. We have done two successful QIPs in the past and we have to make sure that investors continue to get returns. You may recall our QIP in 2010 will hit 269.50 and investors have got returns over five times. Our second one which was USD 0.5 billion in May, 2014, on that even now, despite the setback in the stock last couple of days investors have got more than 125 percent returns. So, there is a very good roster of investors, there is a very good register of existing shareholders the bank has and that is indeed our intent as management to proceed with this QIP sooner than later.Latha: Today the Motherson Sumi Systems issue has gone through and they have not had problems of misinterpretation. So you have got the best legal brains as Anuj has been saying. Is this that instead of looking at the last two week average price, you should have looked at the six month average price. Then probably the stock was overpriced and that is why you the shorting in the market came in. Would you reconsider the price is the point?A: At the right time, when we gear up to proceed with the issue, naturally, we will look at the pricing conditions prevailing at that particular point of time and all I can tell you is the bank is fully prepared to proceed with this QIP at the right time. We also want to make sure shareholders existing in the future do get a satisfactory return in outcome as a consequence of this new issue because there will be anywhere between 10 and 11 percent dilution as a consequence of this issue in course of time. So, whatever happened yesterday was a learning lesson and we have imbibed that and we have shared that naturally with our investors and we will revert back to you with a QIP sooner than later.