The FPO is largely aimed at ensuring adequate capital buffer to support growth plans, alongside absorbing further stress points from high NPA levels.
The further public offering of private sector lender Yes Bank has been subscribed 47.94 percent so far on the second day of bidding - July 16.
The public issue has received bids for more than 434.15 crore equity shares against offer size of over 909.97 crore shares (excluding anchor book portion), the data available on exchanges showed.
The portion set aside for qualified institutional buyers fully subscribed and that of non-institutional investors 10.8 percent, while the reserved portion of retail investors was subscribed 19.3 percent and employees' portion at 10.6 percent.
The private sector lender intends to raise Rs 15,000 crore through its FPO which is scheduled to close on July 17. The price band for FPO has been fixed at Rs 12-13 per share, a major discount to market price.
"The follow-on offer is available at a deep discount to the current market price, without lock-in period criteria, which makes it a unique investment opportunity," said KR Choksey while advising subscribe rating.
"While we see elevated stress pockets for the bank, we draw comfort from the backing of SBI as a key stakeholder (48.2 percent stake in Yes Bank as of June 2020 and lock-in period of 3 years) to absorb any shock," said the brokerage, adding the key investment risk remains the expected stress on its balance sheet; both from the lending portfolio and the investment book.
Apart from SBI, Yes Bank has also been supported by other marquee institutions – Kotak Mahindra Bank, ICICI Bank, Federal Bank, HDFC, Axis Bank, Bandhan Bank and IDFC First Bank which all including SBI had invested Rs 10,000 crore in the bank through Reconstruction Scheme in March this year.
Given the COVID-19 fallout, KR Choksey expects more stress emerging for the bank in the near future, but considering the remedial measures undertaken by RBI/GoI (moratorium window) the actual NPA formation is expected to be deferred by a quarter or two.
The FPO is largely aimed to ensure adequate capital buffer to support growth plans, alongside absorbing further stress points from high NPA levels.
As of March 31, 2020, its common equity tier I ratio (a measure of bank solvency) was at 6.3 percent, which was lower than the RBI's minimum CET I ratio of 7.375 percent.
Yes Bank, which is in need of liquidity and that is a reason behind this FPO launch, has already garnered Rs 4,098 crore by issuing more than 341.53 crore equity shares at Rs 12 per share, to 12 anchor investors including Bay Tree India Holdings I LLC, HDFC Life Insurance Company, Amansa Holdings, Elara India Opportunities, Jupiter India Fund, ICICI Lombard General etc.
Bids can be made for minimum 1,000 shares and in multiples of 1,000 shares thereafter.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 the book running lead managers to the issue.