YES Bank in focus, climbs 9% as board to consider fundraising on Friday

Shares of YES Bank climbed 9 per cent to Rs 68.85 in the early morning deals on the BSE on Wednesday after the private sector lender announced that its board will meet on Friday to consider raising of funds.

“A meeting of the board of directors of YES Bank will be held on Friday, November 29, 2019 to discuss and consider raising of funds by issue of equity/ equity linked securities through permissible modes”, YES Bank said in a regulatory filing. The fundraising is subject to necessary shareholders/ regulatory approvals, as applicable, it added.

YES Bank, on October 31, had informed the exchanges that the bank had received a binding offer from a global investor for an investment of US$ 1.2 billion in the bank through fresh issuance of equity shares. The bank received strong interest from multiple foreign as well as domestic private equity and strategic investors for the capital raise, it added.

Moody's Investors Service in its rating action on November 6, had said that the YES Bank's weakening financial position can be somewhat offset by the planned capital raise.

Nevertheless, Moody's noted that there were significant execution risks around the timing, price and regulatory approvals required. During the review period, Moody's will focus on the bank's ability to raise new equity capital. An inability to raise the planned equity capital will negatively impact Yes Bank's credit profile and ratings, it added.

The bank has publicly disclosed that the binding offer is valid until 30 November 2019.

The rating agency ICRA said it will downgrade the ratings if there is no progress on the capital raise proposed by the bank. Further, in a scenario of capital raise, the bank will have to reduce its share of stressed assets, given the sizeable quantum of stressed assets.

At 09:50 am, YES Bank pared early morning gain and was trading 4 per cent higher at Rs 66 on the BSE. In comparison, the S&P BSE Sensex was up 0.36 per cent at 40,968 points. The counter has seen huge trading volumes with a combined 78 million shares changing hands on the NSE and BSE.