Mumbai: Yes Bank Ltd on Friday managed to close its follow-on public offer (FPO) with 95% subscription, driven by institutional investors, even as HNIs and retail investors showed tepid interest in the bank's offering.
The bank received subscriptions for shares worth ₹14,267 crore in the FPO, at the lower end of the price band of ₹12-13 per share.
Institutional investors drove the subscription, with shares reserved for these investors getting subscribed 1.9 times, excluding the anchor allocation.
"Domestic financial institutions played a big role in the FPO, and subscribed to almost half of the book, excluding the anchor allotment," said a person advising the bank on the FPO.
Some of the institutional investors that participated in the deal include State Bank of India, Life Insurance Corp of India, IIFL, Edelweiss, Bajaj Allianz, HDFC Life, Punjab National Bank, HDFC MF, Union Bank, Bajaj Holdings, Avendus Wealth Management, IFFCO Tokio General Insurance, Norges fund, Millennium Management Global, Aurigin Capital, Exodus Capital, Wellington Capital, Jane Street Capital, said a second person advising the bank.
Apart from institutional investors, demand from all other categories of investors was tepid.
The portion of shares reserved for high net-worth individuals and other non institutional investors was subscribed 63%, while the shares allocated for retail investors and employees were subscribed only 47% and 33%.
While the bank has managed to raise only Rs14,267 crore out of its total target of Rs15,000 crore, the shortfall is likely to be funded by SBI.
The non-subscribed portion of the FPO would be allotted to SBI Capital Markets, who had agreed to underwrite ₹3000 crore worth of shares at a price equal to the lower end of the price band, said a third person cited above.
"While the deal is successfully closed having crossed the minimum 90% subscription mark and does not need to utilise the underwriting, SBI wants to signal its commitment to the bank and thus it will be finding the shortfall to reach the Rs15,000 crore target," he said.
“We are pleased with the completion of our further public offering and would like to thank all the investors, partners and employees who have supported the issue. It is an important step in our journey of transformation and is a testament to the trust placed in the institution," said Prashant Kumar, managing director and chief executive of Yes Bank, in a statement.
Earlier on Tuesday, the lender informed stock exchanges that it had allotted 3.41 billion shares worth ₹4,098 crore to anchor investors a day before its follow-on public offering. The shares were allocated to the anchor investors at ₹12 per share.
Tilden Park invested ₹2,250 crore to lead the anchor investment for its ₹15,000-crore FPO. The other anchor investors include HDFC Life Insurance, Amansa Holdings, Jupiter India Fund, Bajaj Allianz Life Insurance, ICICI Lombard General Insurance, Reliance General Insurance, RBL Bank, Edelweiss Crossover Opportunities Fund, ECL Finance, Elara Capital, and Hinduja Leyland Finance.
The funds raised from its FPO will take care of its growth requirements for two years. The ₹15,000 crore will be used as buffer provisioning, said Prashant Kumar, managing director and chief executive officer of Yes Bank in a press meet on Monday. He, however, said the provisioning against the impact of covid-19 will not be more than 100 bps.
The bank is aiming for a loan book mix of 60% for retail and small and medium enterprises (SMEs) and 40% for corporates, Kumar said. The private lender is targeting 1% return on assets over the next 1-3 years and 1.5% over 3-5 years.
The bank also aims to hive off its bad loans into a separate subsidiary, Kumar said.
Following the FPO, the bank’s capital adequacy ratio will increase to 13% from the existing 6.3%. SBI, the largest investor in Yes Bank, will invest up to ₹1,760 crore in the FPO. SBI’s additional investment will ensure that its stake does not fall below 26% after the FPO.
Click here to read the Mint ePaperLivemint.com is now on Telegram. Join Livemint channel in your Telegram and stay updated
