YES Bank launches $650-mn QIP offer

The floor price has been fixed at Rs 1,498.95 per share

After scrapping its last offering in September, private sector YES Bank Ltd on Thursday said it would go for a fresh round of share sale through qualified institutional placement (QIP).

The bank’s board had passed resolutions in April and October last year allowing the bank to raise $1 billion equivalent (including premium) in rupee of capital through QIP. However, this time the bank is trying to raise a total of $750 million equivalent ($650 million in base price and $100 million through greenshoe option).

In a notice on exchanges, YES Bank said its QIP opened on Thursday itself. According to an investment banking source, the closure could be on Friday, March 24, 8 AM, “with an option to close earlier subject to acceleration.”

The floor price, as per the formula of capital market regulator Securities Exchange Board of India (SEBI) has been fixed at Rs 1,498.95 per share. “The bank may at its discretion offer a discount of 5% on the floor price of QIP,” it said in the filing.

The capital raising committee of the bank will decide on 29 March on the pricing of the shares. The pay-in is expected to be on or about March 31. According to the source, the price range would be Rs 1,455-1,500 per share. The bank has appointed four banks to manage the deal – CLSA, Bank of America Merrill Lynch, IIFL, and Motilal Oswal. In its last QIP offering, Goldman Sachs was also one of the investment banks, but not this time.

The bank in September cancelled its $1 billion offering, citing “extreme market volatility” and “misinterpretation of new QIP guidelines.”

““Due to extreme volatility during today’s (Thursday) trading day because of misinterpretation of new QIP guidelines, YES Bank has been advised by its appointed merchant bankers to defer its proposed QIP,” the lender had stated on September 8.

Foreign ownership in the bank is at 42.5% and the bank has room to increase that to 74%, the bank’s chairman and managing director Rana Kapoor had said in October.  With the better economic growth, the bank is confident it will be able to raise the money successfully. A $1 billion QIP would have diluted 15% in the bank.