BackYes Bank seeks to hike FII limit, issue depository receipts
The bank board has approved issuing up to 10 million depository receipts to its US-based investors
Premium
Mumbai: The board of directors at Yes Bank Ltd has approved raising the bank’s foreign institutional investor (FII) limit to 74% from 49%. The bank will seek government approval after the move is approved by the shareholders. As of March, FIIs hold 45% shares in the bank.
The bank board has also approved issuing up to 10 million depository receipts (DRs) to its US-based investors. However, this is subject to final guidelines by the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (Sebi).
DRs are foreign currency denominated and are issued in the country of listing. The underlying security of these receipts are local equity shares. For every two equity shares issued by the Indian company, a bank in the US can issue one DR. However, DRs do not result in any capital raising for Indian firms.
“For us, the advantage is to build a very different class of investors who may otherwise not have access to our shares because they are not registered as FIIs in India. We will partner with JP Morgan Chase & Co. for this DRs which means that JP Morgan can issue DRs in the US for shares bought in India. However, this is still subject to final guidelines from Sebi and RBI," said Jaideep Iyer, group president, financial management at Yes Bank, adding this could be a “baby step" for the bank before the possible listing in the US through American Depository Receipts (ADRs).
On Wednesday, the bank’s board had also approved a move to seek shareholder and regulatory approval to raise up to $1 billion by selling shares in one or more tranches through “any appropriate mode as deemed suitable", including ADRs.
Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!
