Yes Bank says it will raise funds through a follow-on offering

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Mumbai: Private sector lender Yes Bank on Tuesday said its board has approved raising of capital through a follow-on public offer (FPO).

“We wish to inform you that the capital raising committee (CRC) of the board of directors of the bank, at its meeting held earlier today 7 July, 2020, has approved raising funds by way of a further public offering,” it said in a regulatory filing.

The bank also said that a meeting of the CRC is scheduled to be held on or after 10 July, to consider and approve, amongst other things, the price band and discount, if any.

The bank has an enabling resolution to raise up to 15,000 crore this year. Mint reported on 7 July that the bank is preparing for a follow-on public offer (FPO) in the second week of July

“Post closure of the requisite formalities with the Registrar of Companies, Maharashtra at Mumbai, the details in respect of the offer will be disseminated,” the bank said.

Prashant Kumar, chief executive of Yes Bank had told Mint in May that it would be desirable to raise the money in the first quarter of FY21.

“It will be dependent on what merchant bankers tell us – it could be FPO, rights issue, a combination of qualified institutional placement (QIP) and rights issue. If we are able to raise 15,000 crore, then there is no need to come back to market for three years. If we are able to raise 10,000 crore-12,000 crore, then there is no need to come back for two years,” Kumar had said.

The fundraising is critical for Yes Bank despite equity infusion worth 10,000 crore by financial institutions and gains worth 6,300 crore from the write down of additional tier I (AT1) bonds. Last month, the Reserve Bank of India (RBI) turned down its request for permission to pay interest on its Tier II bonds due on 29 June. In a regulatory filing on 20 June, the bank said that the interest due and remaining unpaid shall be accumulated and be paid by the bank later, subject to it complying with the regulatory requirement.

Yes Bank’s total capital adequacy ratio stood at 8.5% in the March quarter, of which common equity tier I (CET1) ratio was 6.3% and Tier II ratio was at 2% after a bout of capital infusion from private and public sector lenders.

On 13 March, the government had approved a rescue plan for Yes Bank backed by SBI. Under the plan, domestic investors including SBI, Housing Development Finance Corp, ICICI Bank, Kotak Mahindra Bank, Bandhan Bank, Federal Bank and IDFC First bank invested 10,000 crore into Yes Bank. In the rescue process, Yes Bank’s AT1 bonds worth 8,415 crore were written down in full in March.

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