Yes Bank allots 3.41 bn shares to anchor investors, raises Rs 4,100 cr

Yes Bank on Tuesday allotted shares worth Rs 4,100 crore to 14 institutional investors in the ‘anchor’ category of its follow-on public offering (FPO).

Around 3.41 billion shares were allotted at Rs 12 apiece. More than half of the shares in the anchor book were subscribed by US-based asset manager Tilden Park (under account name Bay Tree India). HDFC Life and Amansa subscribed shares worth nearly Rs 400 crore each. Jupiter India, Bajaj Allianz, ICICI Lombard, Reliance General Insurance and RBL Bank are among some of the other anchor investors.

Anchor allotment is done a day ahead of an initial or follow-on public offering. The allotment gives retail and other investors a signal regarding the demand for the share sale. Shares issued to anchor investors are subject to a 30-day lock in.

The price band for the FPO is Rs 12 to Rs 13 per share. Shares allotted to anchor investors are at the lower end of the price band.

Yes Bank is looking to raise a total of Rs 15,000 crore through the FPO. The capital raising is aimed at “ensuring adequate capital to support growth and expansion, including enhancing the bank’s solvency and capital adequacy ratio.”

In March, as a part of the rescue plan, Yes Bank received Rs 10,000 crore equity infusion from 8 financial institutions led by the State Bank of India (SBI). These investors were allotted shares at Rs 10 per share and 75 per cent of their holdings are locked in for three years. The state-owned lender had invested Rs 6,050 crore and got 48.2 per cent stake (pre-FPO basis). SBI has board approval to invest another Rs 1,750 crore in the FPO. SBI wasn’t among the anchor investors.

Angel Broking on Tuesday in a FPO note issued a ‘neutral’ rating to the issue.

“At the upper end of the price band, Yes Bank demands price-to-book (on adjusted basis) of 0.85 times post considering FPO. In current market, other banks are trading at attractive valuation of FY20 net worth, including IDFC Bank (0.9x), SBI Bank (0.5x core banking business), Federal Bank (0.9x),” it said.

Market experts said investing in Yes Bank at current juncture is akin to investing in a bank looking to start over anew. However, the bank has advantage of its current branch and ATM network and existing employees.

However, the bank’s asset quality is one blind spot, say analysts.

“Our concern for Yes Bank is fresh formation of bad loans that would keep provision highs and return ratio compressed for longer time. Retail deposit is the key for any bank for lower cost of funds, however, YBL has witnessed sizeable deposit withdrawal over last two quarters. Rebuilding CASA and deposits is a challenging task and would take longer time. Overall, the bank’s revival and decent return on equity numbers will take longer time,” said Jaikishan Parmar, analysts at Angel Broking.

About Rs 200 crore worth of shares in the FPO are reserved for employees, who will also be given a discount of Re 1.

Yes Bank FPO anchor investors	Allotment (Rs cr)
Bay Tree	2,250
HDFC Life	400
Amansa	373
Elara	372
Hinduja Leyland	170
Jupiter*	150
Bajaj Allianz	150
RBL Bank	100
ICICI Lombard	60
Edelweiss AIF*	35
Reliance General	25
ECL Finance	14
Source: Yes Bank; Note: *Applied via multiple accounts