YES Bank declines 8% as it rejects $1.2 bn offer by Braich, SPGP Holdings

Shares of YES Bank slipped 8 per cent to Rs 41.20 on the BSE on Monday in the early morning deals after the private sector lender scaled down its fundraising plan substantially to Rs 10,000 crore, from nearly $2 billion approved by the board in November, as it continued with its struggle to get investors. The stock ended 5 per cent lower at Rs 44.80 on Friday.

YES Bank board has rejected $1.2 billion offer by Erwin Singh Braich and SPGP Holdings. At the same time, the bank’s board has approved fund raising of up to Rs 10,000 crore.

“The Bank has received an updated proposal from the investor extending the validity of its offer until January 31, 2020 for the Bank's consideration and further evaluation. However, the Board has decided not to proceed with the offer,” YES Bank said in an exchange filing on Friday after market hours.

Meanwhile, the board has approved for raising of funds upto Rs 10,000 crore, in one or more tranches, on such terms and conditions as it may deem fit, by way of issuance of securities including but not limited through Qualified institutional placement (QIP)/ Global Depository Receipts (GDRs)/ American Depository Receipts (ADRs)/ Foreign Currency Convertible Bonds (FCCBs)/ or any other methods on private placement basis.

However, it is “willing to favourably consider the offer of $500 million of Citax Holdings and Citax Investment Group and the final decision regarding allotment to follow in the next Board meeting, subject to requisite regulatory approval(s),” it added.

“Uncertainty regarding equity capital fund infusion, doubts over asset quality and sustained decline in market share from profitable assets lead us to retain our view that YES has a long way to go when it comes to rationalizing operations, resulting in sustained credit cost at lower levels,” analysts at Elara Capital had said in a note published in December. 

In the near term, the rating agency India Ratings and Research (Ind-Ra) expects certain standard stressed group exposures (rated BB and below) of the bank to continue to slip into the non-performing category.

The need to accelerate provisions on existing GNPAs and additional slippages along with the reduced pool of performing assets would keep the profitability of the bank under pressure. The Rating Watch Negative reflects the dependency of the rating level on the timing and quantum of equity raise by the bank, Ind-Ra had said in a rating rationale.

At 10:05 am, YES Bank was trading 6 per cent lower at Rs 42.25 on the BSE. In comparison, the S&P BSE Sensex was up 0.51 per cent at 41,811 points. A combined 67 million equity shares changed hands on the counter on the NSE and BSE so far.