Share price of the private sector lender Yes Bank rallied 5% in early trade as the board approval for fund raising provided sentimental boost.
The counter has since trimmed gains and was last quoting at Rs 26.40 apiece, up 2.5% on NSE.
Last evening, the lenders board approved fund raising proposal worth Rs 10,000-15,000 crore, depending on the demand, through follow on public offer (FPO) of shares.
The private sector lender will soon file FPO papers with the market regulator SEBI and registrar of companies before offering shares via a public offer.
The raising of funds via FPO will help the bank restore its capital adequacy ratio. Capital Adequacy Ratio of YES Bank was pegged at 8.5% at the end of FY20, as opposed to 16.5% seen at the end of FY19. The bank’s Tier I ratio was below RBI’s regulatory minimum.
A meeting of the Capital Raising Committee of the lender is scheduled on July 10 to consider and approve the price band and discount, if any, as permitted under the provisions of the SEBI ICDR Regulations.
Technically, the bank can launch the FPO after a gap of one working day of the CRC meeting that is scheduled on 10 July.
Investment banks Axis Capital, Kotak Mahindra Capital, Citi and Bank of America are advising Yes Bank on the FPO.
The government had in March approved a rescue plan for Yes Bank. Under the plan, domestic investors including SBI, Housing Development Finance Corp. Ltd, ICICI Bank, Kotak Mahindra Bank, Bandhan Bank, Federal Bank and IDFC First Bank invested Rs 10,000 crore into Yes Bank. State-run SBI led the rescue with a Rs 6,050 crore infusion and currently holds a 48.2% stake in the bank.
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