By- Divya Vohra
Yes bank scrapped its $1-billion share sales within
24 hours of launch. The major reason behind this were an innocuous provision in
the Securities and Exchange Board of India’s regulations of 2015 on listing
obligations and disclosure requirements (LODR) and poor investor appetite as
investors were not able to comprehend QIP (Qualified Institutional Placement). (QIP
is a capital-raising tool, primarily used in India and other parts of Southern
Asia, whereby a listened company can issue equity shares, fully and partly
convertible debentures, or any securities other than warrants which are
convertible to equity shares to a qualified instructional buyer).
Yes
Bank was among the top losers in the BSE with its shares falling 5.32% to end
at Rs 11,330.65. In two days bank’s share lost 9.43% of its value.
Initially the demand was good but later it declined.
After such a drastic change investors refused to put money in it and in result
bank scraped it.
This is the first such cancellation of an ongoing
share sale by a private sector bank in recent memory due to lack of demand,
while other banks have been successful with their sales receiving strong
response.
YES Bank CEO Rana Kapoor told CNBC that the offer
was fully subscribed at 4 a.m. in India on Thursday, but he was advised to keep
it open for three days before the regulator would allow the shares to be priced
and allocated. That inordinately long window rattled bidders, especially after
the stock fell as low as 1,321.25 rupees, below the minimum 1,350 rupees new
share sale price.
Yes Bank can always claim that it was merely
following the Securities and Exchange Board of India’s guidelines on not
unfairly diluting current shareholders. But in that case, it would have done
well to eschew the hubris of trying to raise $1 billon, half the bank’s
existing equity, in a single shot from investors who may not be entirely
convinced it deserved to be bought at more than four times last year’s book
value.
Yes Bank might continue to outperform its rivals,
giving investors many good reasons to take a punt on it.
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