Yes Bank’s Rs 15,000 crore FPO opens July 15; SBI readies another Rs 1,760 cr investment in lender

Of the Rs 15,000 crore, Yes Bank’s FPO will have an employee reservation portion of up to Rs 200 crore.

Cash-strapped private sector lender Yes Bank informed the stock exchanges on Thursday that it will raise Rs 15,000 crore through issuance of fresh equity shares in its further public offering (FPO). The FPO will open on July 15 and will close on July 17. The move comes days after the lender informed the bourses that its Capital Raising Committee of the Board of Directors met and approved raising funds by way of a further public offering. Of the Rs 15,000 crore, Yes Bank’s FPO will have an employee reservation portion of up to Rs 200 crore. Yes Bank will follow the lead of other private-sector lenders like ICICI Bank, Kotak Mahindra Bank, and HDFC Bank in raising capital.

“The bank has filed a red herring prospectus dated July 7, 2020 (RHP), in connection with the offer, with the Registrar of Companies, Maharashtra at Mumbai,” Yes Bank said in a regulatory filing on Thursday. Banks have been trying to shore up capital in the wake of the coronavirus pandemic and the uncertainties it has brought with itself. Credit rating agencies are of the view that the pandemic and the resultant slowdown in the economic activity will push recoveries for Indian banks back by at least a year.

Additionally, India’s largest public sector bank, State Bank of India (SBI) said that its executive committee has approved a maximum investment of up to Rs 1,760 crore in the FPO of Yes Bank. SBI is one of the biggest investors in Yes Bank after the lender was restructured by the RBI earlier this year. State Bank of India, in March this year invested Rs 6,250 crore in the lender, although it had an approval to invest close to Rs 7,000 crore. Earlier yesterday, India’s second-largest private lender, ICICI Bank’s also informed the stock exchanges that it will raise Rs 15,000 crore through a share sale. ICICI Bank had said it would try to raise capital when the lender announced its March quarter numbers. 

Yes Bank has also sold 1.66 crore equity shares having a nominal value of Rs 2 each of CG Power & Industrial Solutions Limited in various tranches. Earlier this year, Yes Bank was saved from going bust earlier this year when RBI roped in SBI and 7 other financial institutions to save the struggling lender. Yes Bank stocks were trading up 2.5% at Rs 26.75 per share on Thursday.