Yes Bank set to launch biggest QIP of 2016
Yes Bank wants to use the funds from its $1 billion share sale to bolster its capital for meeting prudential norms and support its expansion
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Mumbai: Yes Bank Ltd will raise up to $1 billion by selling new shares to institutional investors, it said in a stock exchange statement on Wednesday. The bank proposes to use the funds to bolster its capital for meeting prudential norms and support its expansion.
The private sector lender has hired Goldman Sachs (India) Securities Pvt. Ltd, Motilal Oswal Investment Advisors Pvt. Ltd and CLSA India Pvt. Ltd as the lead managers for the offer known as a qualified institutional placement (QIP).
On 21 June, Mint reported that Yes Bank Ltd had hired Goldman Sachs Group Inc. to help the lender raise as much as $1 billion through a QIP offer.
In total, Yes Bank has hired 11 banks to manage the share sale.
“We intend to use the net proceeds of the issue for meeting capital requirement under Basel III norms and ensuring adequate capital to support growth and expansion,” the company said in the offer document.
Shares are being offered to institutional investors in a range of Rs.1,350 to Rs.1,410 per share.
The lower end of the band is at a discount of 3.7% to the closing price on Wednesday.
On Wednesday, shares of Yes Bank fell 2.46% to Rs.1,405.40 on BSE. The benchmark Sensex was little changed.
At the lower end of the price band, the fresh issue will lead to a 11.7% dilution in Yes Bank’s equity base.
“The strengthening of the tier-1 capital structure is basically intended to expand its loan book for some of the structured assets, which are being built under the capex program of the country,” said Deven Choksey, group managing director, KR Choksey Investment Managers Pvt. Ltd.
The Yes Bank fund raising will be the biggest QIP so far in 2016.
So far this year, just five companies have raised Rs.708.5 crore through the QIP route, data from primary market tracker Prime Database shows.
In 2015, 32 companies had raised Rs.19,064 crore through QIPs, while in 2014, 33 companies had raised Rs.31,684 crore through the route, data shows.
Yes Bank is not the only Indian bank raising funds.
On Wednesday, Bloomberg reported that State Bank of India has picked banks to work on a bond offering that could raise about $1 billion, in India’s first sale of dollar additional Tier 1 bonds since the country implemented Basel III rules.
India’s largest lender chose firms including Bank of America Corp., Citigroup Inc. and JPMorgan Chase & Co. for the offering of loss-absorbing capital instruments, according to Bloomberg.
HSBC Holdings Plc, National Bank of Abu Dhabi PJSC, SBI Capital Markets Ltd and Standard Chartered are also working on the sale.
In June 2014, Yes Bank had raised $500 million (Rs.2,900 crore) through a QIP, for which it had had hired Deutsche Bank AG, HSBC Holdings Plc, Motilal Oswal Securities Ltd, JM Financial Ltd, UBS AG and Goldman Sachs for the fund raising.
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