Yes Bank: Limit on FPO listing gain

The private sector lender Yes Bank’s Rs 15,000-crore follow-on public offer (FPO) has a little to offer investors searching for listing gain.
The FPO priced at Rs 12 per share as against Tuesday’s closing price of Rs 20.95, can be bought by investors with the long term horizons.

For those applying in this FPO, it would be immature to assume that one would subscribe at 13 and sell on allotment at a huge profit as almost everyone may want to utilise that opportunity to make a quick buck.
Traders, who sold shares they did not own — called short-selling — a few days ago to bet on the fall in the stock price before the FPO, are likely to subscribe aggressively to the issue. Since the announcement of the FPO price, the stock has fallen almost 20%.

Yes Bank FPO will remain open from July 15 to July 17.
On Tuesday, the private sector lender raised Rs 4,500 crore from anchor investors. FPIs have been allocated shares at Rs 12 in the anchor portion.

These investors include US-based alternative asset manager Tilden Park Capital Management LP, Singapore-based fund management company Amansa Capital and UK-based fund management firm Jupiter Fund.
The Rs 15,000 crore FPO will help the lender meet its capital requirements for the next two years.
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.

Investment banks Axis Capital, Kotak Mahindra Capital, Citi and Bank of America are advising Yes Bank on the FPO.
In March, the govt had 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.
Yes Bank stock price has fallen 77.5% in the last year.

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