Yes Bank slides as board approves to raise $2 billion

Yes Bank said that its board approved a decision to raise upto $2 billion through preferential allotment of shares.

The scrip fell 2.65% to trade at Rs 66.55. It has traded in the range of Rs 63.10 and Rs 70.50 so far during the day.

The bank, in an exchange filing post trading hours on Friday, said that various investors have expressed willingness to subscribe to equity shares of the bank.

Among the institutional investors, a top-tier US Fund House, Discovery Capital and Ward Ferry expressed interest in acquiring fresh stake in the bank. Aditya Birla Family Office, Citax Holdings Ltd & Citax Investment Group, GMR Group and Associates, Erwin Singh Braich I SPGP Holdings and Rekha Jhunjhunwala are the five family offices that have expressed interest in subscribing to the equity of the bank.

None of the investors will be allotted equity shares such that their holding exceeds 25% of the share capital of the bank.

The bank's board shall reconvene on 10 December 2019 to finalize and approve the details of the preferential allotment, subject to regulatory and statutory approvals.

Shares of Yes Bank declined amid reservations about the quality of the investors. Media reports suggested that Erwin Singh Braich had gone through bankruptcy proceedings roughly 20 years ago. Not much is known about the companies he has founded and promoted, the reports added.

According to Yes Bank's exchange filing, Erwin Singh Braich along with SPGP Holdings has expressed interest to invest $1.20 billion, nearly 60% of the proposed $2 billion capital, in the Bank.

As per reports, obtaining regulatory approval from the Reserve Bank of India (RBI) is going to be a big hurdle for the bank as in the past, the central bank has stayed away from giving a go-ahead to investors without having a publicly known track record.

Additionally, regulatory rules do not allow for any single investor to hold more than 10% in a bank, the reports said.

Yes Bank reported net loss of Rs 600.08 crore in Q2 September 2019 as compared to net profit of Rs 964.70 crore in Q2 September 2018. Total income fell 4.28% to Rs 8332.21 crore in Q2 September 2019 over Q2 September 2018.

On the technical front, the stock's RSI (relative strength index) stood 54.25. The RSI oscillates between zero and 100. Traditionally the RSI is considered overbought when above 70 and oversold when below 30.

The stock was trading above its 50-day placed at Rs 56.78 but was below its 200-day moving average (DMA) placed at Rs 129.99.

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