Yes Bank: Investor Tentative on Fundraising, NPAs

Yes Bank

Yes Bank share price continues to languish near 10-year low as investors – both, institutional and individual – have turned wary of prevailing uncertainty due to fundraising delays and lingering concerns over bad loan provisions.
One of the above concerns is being addressed last Friday, as the board approved fundraising of up to Rs 10,000 crore through debt and equity.
The Yes Bank management has also decided not to proceed with the offer from Erwin Singh Braich/SPGP Holdings.

The lender in its board meet today approved fundraising in one or more tranches through QIP, FCCB or GDR.

The offer from Citax Investment will be taken up in the next round, YES Bank said in a statement to the exchanges.

The lender in November 2019 had announced that it would raise nearly $2 billion via share sale with Canadian billionaire Erwin Singh Braich investing $1.2 billion.

Other investors included Citax Holdings & Citax Investment Group that had offered to invest $500 million.

On the management front, the exit of Uttam Prakash Agarwal – an independent director – should help bring some stability.

Agarwal resigned citing deteriorating corporate governance standards and compliance failure at the lender.
Meanwhile, fears of rising friction within the management and with the regulator forced institutional investors to press the exit button.

Shares of private lender YES Bank were on mutual funds’ sell radar in the three months ending December 31.

In fact, the mutual fund stake in most of these stocks fell to multi-year lows during the quarter. The data showed mutual funds cut stakes in YES Bank to 5.1% in the December quarter, lowest since the March quarter of 2013 when it had stood at 3.8%.

A delay in the bank’s fund-raising plans turned them cautious. MFs had held a 9.3% stake in the bank at the end of September and 10.2% at the end of December last year.

After attaining clarity on fundraising and the likelihood of an end to management tussle, the focus will be on the upcoming earnings release. Investors will like to gauge provisioning impact and guidance for the upcoming quarter.

It seems with the end of fundraising uncertainty and stability in operations, Yes Bank is set to lure investors into buying the stocks. Meanwhile, there are some media reports about some prominent investment bankers being hired to raise funds for Yes Bank

However, the fundraising activity looks to be the only positive factor from a market standpoint in the short term as if funds are raised before March 2020 then this will be given the much-needed capital for Yes Bank to survive ahead.

Disclaimer –
This document is meant for the recipient only for use as intended and not for circulation. This document should not be reproduced or copied or made available to others. The information contained herein is from the public domain or sources believed to be reliable. While reasonable care has been taken to ensure that information given is at the time believed to be fair and correct and opinions based thereupon are reasonable, due to the very nature of research it cannot be warranted or represented that it is accurate or complete and it should not be relied upon as such. Also above note is not a recommendation to Buy or SELL and is only a view based on facts and figures and we will be in no way responsible for any losses incurred by anyone who uses this information to either trade or invests securities mentioned herein.