YES Bank FPO undersubscribed; but sails through

The follow-on public offer (FPO) by the embattled lender YES Bank has managed to sail through on its last day, even as the offer for sale was undersubscribed.

The bank has been able to raise Rs 14,266.97 crore through the capital raising drive.

Of the 1,251.51 crore shares that were offered for the sale in the price band of Rs 12-Rs 13 per share by the bank, 1,189.41 shares were subscribed. The subscription was mainly driven by the qualified institutional buyers (QIBs) and the anchor investors. Sans anchor investors, the bank's share subscription stood two percentage points lower at 93%.

On July 14, the bank had raised Rs 4,098 crore from 14 anchors at Rs 12 per share, with 341.54 crore shares fully subscribed. The anchor investors included US-based stressed asset fund, Tilden Park Capital via Bay Tree India Holdings LLC; Singapore based fund management company, Amansa Capital, and UK based Fund management company, Jupiter Funds. Collectively these three foreign investors came together to acquire 75% of the shares offered to the anchors.

The other domestic institutions that invested as anchors include HDFC Life Insurance, Bajaj Allianz Life Insurance, ICICI Lombard General Insurance, Reliance General Insurance, RBL Bank Limited, Edelweiss Alternative Investment Opportunities Trust, Elara India Opportunities Fund, Hinduja Leyland Finance, and ECL Finance.

The non-anchor institutional investors' portion was oversubscribed 1.90 times, with bank being able to raise Rs 6,281.82 crore from them.

As per market sources, a total of 27 institutions such as SBI, LIC, IIFL, Edelweiss, Bajaj Allianz, HDFC Life, Punjab National Bank, HDFC MF, Union Bank, Bajaj Holdings, Avendus Wealth Management, IFFCO Tokio General Insurance, Norges fund, Schonfeld, Millennium Management Global, Aurigin Capital, Exodus Capital, Wellington Capital, Jane Street Capital, Segantii Capital Management and De Shaw & Co bid for the non-anchor QIB portion.

However, the retail portion and the employee reserved portion of the FPO was heavily oversubscribed. Retailers, who were the worst hit by the collapse of the YES Bank, subscribed to just 47% of the shares reserved for them. On the other hand, the bank's employees subscribed to just 33% of the shares reserved for them.

The non-subscribed portion of the FPO as per it’s underwriting agreement with the bank would be allotted to SBI Capital Markets, who had agreed to underwrite Rs 3000 cr worth of shares at a price equal to the lowest end of the price band.