The stock of the private sector lender rallied 17 per cent after the Bank, on Tuesday, said its board will meet on Friday, November 29, 2019, to discuss and consider fundraising by issue of equity/equity linked securities through permissible modes. The fundraising is subject to necessary shareholders/ regulatory approvals, as applicable, it said.
On October 31, YES Bank had informed the exchanges that the bank had received a binding offer from a global investor for an investment of $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.
A quick capital raise from a reputable institution holds the key in regaining confidence and giving the YES Bank enough of a buffer on loss absorption, analysts at JP Morgan said.
“We rate YES Bank as ‘underweight’ because we believe earnings normalization for the bank will start only in FY22 and that growth will take a hit until the equity-raising issue is resolved. Stress in mid corporate space and Bank’s exposure into this could continue to pressure valuations medium term, in our view,” the foreign brokerage firm said in report dated November 20.
At 10:10 am, YES Bank was trading 4.5 per cent higher at Rs 73 on the BSE, as compared to 0.57 per cent decline in the S&P BSE Sensex. The counter has seen trading volumes with a combined 120 million equity shares, representing 4.5 per cent of total equity of YES Bank, changing hands on the NSE and BSE so far.