Private sector lender Yes Bank will launch its Rs 15,000-crore follow-on public offering (FPO) on July 15.
After the exit of co-founder Rana Kapoor, the troubled private lender is now backed by marquee institutions – State Bank of India (SBI), HDFC, ICICI Bank, Axis Bank, Kotak Mahindra Bank, Federal Bank, Bandhan Bank and IDFC First Bank, who invested Rs 10,000 crore in the bank through a government-approved reconstruction scheme in March this year.
After fixing of the price band, much lower than the market price, the stock has lost 22 percent and was trading at around Rs 20.7 on July 14.
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 are lead managers for the issue.
ALSO READ: Rossari Biotech IPO, Bharat Bond ETF & Yes Bank FPO: Where should investors put their money?
The bank, in consultation with its merchant bankers, has fixed a price band of Rs 12–13 per equity share, a discount of 53 percent – and 49 percent to its July 10 closing.
Yes Bank intends to use proceeds towards ensuring adequate capital to support its growth and expansion, including enhancing its solvency and capital adequacy ratio.
As of March 31, 2020, the bank's CET (common equity tier) I ratio was at 6.3 percent. The RBI prescribed a minimum CET I ratio of 7.375 percent by March 31, 2020. "This minimum CET I ratio requirement will increase to 8 percent by September 30, 2020," the bank said in its prospectus.
ALSO READ: SEBI may probe Yes Bank share transactions under SLBM after FPO announcement
The issue opened for anchor investors for on July 14. The bank may, in consultation with the book managers, allocate up to 60 percent of the QIB (qualified institutional buyer) portion to anchor investors on a discretionary basis. Hence, the QIB portion will accordingly be reduced for the equity shares allocated to anchor investors.
The issue is being made through book-building process, where allocation to QIBs is up to 50 percent, non-institutions bidders not less than 15 percent and retail individual bidders not less than 35 percent.
The bank has a presence in all the 28 states and in eight union territories of the country. It has a representative office in Abu Dhabi as of March 2020. It is a full-service commercial bank specialising in merchant banking, digital banking, brokerage business, asset management and investment banking.
As of March 2020, the bank had a network of 1,135 branches and 1,423 ATMs.
Its assets decreased from Rs 3,12,449.65 crore as of March 2018 to Rs 2,57,832.16 crore as of March 2020 at a CAGR of (9.16) percent. Its total deposits have declined from Rs 2,00,688.6 crore as of March 2018 to Rs 1,05,311.16 crore as of March 2020 at a CAGR of (27.96) percent.
CASA deposits for the bank decreased from Rs 73,174 crore as of March 2018 to Rs 28,046.1 crore as of March 2020 at a CAGR of (38.09) percent.
Advances have decreased from Rs 2,03,518.82 crore as of March 2018 to Rs 1,71,433 crore as of March 2020 at a CAGR of (8.22) percent.Financials
The bank reported a net loss of Rs 16,432.58 crore for 2019-20, hit by higher provisions that increased more than four-fold to Rs 28,312.49 crore during the year.
"The increase in NPA as a consequence of additional slippages and increase in PCR has resulted in higher provisioning and a loss in our results for fiscal year 2020," the bank said.
The lender reported a profit of Rs 1,709.26 crore in the previous year.
Net interest income during the year fell sharply by 30.8 percent to Rs 6,793.96 crore compared to the previous year.
As of March 31, 2020, the bank's gross non-performing assets amounted to Rs 32,877.58 crore, or 16.80 percent, of the gross advances, and net NPAs amounted to Rs 8,623.78 crore, or 5.03 percent of the net advances. The bank had non-performing investments of Rs 9,222.38 crore as of March 2020, with provisions of Rs 6,825.42 crore as of same date.
Public shareholding in the bank stood at 98.58 percent as of March 2020, of which country's largest lender State Bank of India held 48.21 percent stake.
ICICI Bank held 7.97 percent, Axis Bank 4.78 percent, Federal Bank 1.92 percent, IDFC First Bank 1.67 percent, Bandhan Bank 2.39 percent, HDFC 7.97 percent and Kotak Mahindra Bank 3.61 percent.
Under the reconstruction scheme, drawn up by the Reserve Bank of India, SBI is required to hold not more than 49 percent and not less than 26 percent of the total equity shares in Yes Bank. which is subject to a three-year lock-in from March 14, 2020.
Other investors are subject to a three-year lock-in from March 13, 2020 for 75 percent of the investments they made in the bank .
LIC holds 1.64 percent stake in Yes Bank, while current promoters' stake is at 1.42 percent.
Prashant Kumar, the ex-DMD and CFO of State Bank of India, is the Managing Director and Chief Executive Officer of Yes Bank.
Sunil Mehta is the Non-Executive Chairman while Mahesh Krishnamurti and Atul Chunilal Bheda are Non-Executive Directors on the board.
Rama Subramaniam Gandhi and Ananth Narayan Gopalakrishnan are Additional Directors and Partha Pratim Sengupta and Swaminathan Janakiraman are Non-Executive Directors and Nominee Directors from State Bank of India.
Yes Bank's new management has set the objective to rebuild the bank and calibrate growth over the next six to twelve months by rebuilding liabilities and liquidity buffers, optimising cost, strengthening the governance and underwriting framework, and focusing on stressed assets resolution.
Its medium-term objectives are:
(a) Stabilise liability mix and lower cost of funds with an aim to increase CASA ratio to more than 40 percent
(b) Provide granular advances, with retail, small and medium enterprises being more than 60 percent
(c) Enhance corporate flows and cross-selling through transaction banking
(d) Increase Return on Assets to above 1 percent within the one to three years and above 1.5 percent within three to five years.
As of March 2020, Yes Bank had three subsidiaries--YES Securities, YAMIL and YTL.
YES Securities is engaged in merchant banking, investment banking, institutional sales and trading and equity research. YAMIL offers services of an investment manager and YTL acts as a trustee to YAMIL.