YES BANK MD and CEO Ravneet Gill has termed the oversubscription of the recent QIP as a validation of the investors’ belief that the bank’s operating model was still relevant and that it had the ability to bounce back very strongly.
YES BANK’s recent Qualified Institutional Placement (QIP) was oversubscribed three times, raising a total of Rs 1,930.4 crore from qualified institutional buyers (QIBs). Two other IPOs in the market launched at the same time were undersubscribed.
Gill added that the successful offer was also an indication that investors were beginning to understand YES BANK better in terms of asset book and growth strategy.
YES BANK had allotted 23.1 crore equity shares of face value of Rs 2 each to eligible QIBs at Rs 83.55 per equity share, in accordance with the pricing formula of Securities and Exchange Board of India (SEBI).
The bank raised this amount in spite of demand for more funds because shareholders approved only a 10 percent dilution. The QIP took the bank’s CET-1 (common equity tier-1 capital) from 8 percent to 8.60 percent.
“The raised amount gives us more breathing room, time to think about our future growth trajectory, and also the kind of partners we need to bring on board. Going forward, we will look at growth capital as well as transformational capital, which will help us diversify our businesses and differentiate ourselves as institutions,” Ravneet Gill said.
The quality of investors, including first-timers such as HDFC MF and the US-based Key Square Master Fund, indicates that the perception around the bank is beginning to change. The investors were given the real picture in terms of asset book and the bank’s growth plans. They drew comfort from the bank’s ability to bounce back, generate strong revenues, and access capital on an ongoing basis.
YES BANK has always been seen as a well-structured financial institution. But equally there are two other businesses — retail bank and transaction bank, which are good but are undersized. Therefore, the bank saw it necessary to inform investors about its future strategy to scale up these businesses.
YES BANK is currently looking to free up capacity for retail growth by cross-selling retail assets, which is important to generate liabilities as well as strengthen the liabilities franchise.
Meanwhile, YES BANK is talking to strategic investors and global majors who can significantly ramp up its digital footprint, especially data mining and analysis, which will give it an edge in risk assessment and open up new market segments.
On technological advancement, Ravneet Gill said, “There is a saying that banks will become technology companies with a banking license. From this perspective, I don’t think there is another bank which is as digitally enabled as YES BANK. This is something the market has not recognised yet. We are looking for partners to help us build on our existing digital capabilities. We want to be in the forefront when banks become technology companies with a banking license.”
YES BANK is also confident of expanding its CASA book and transforming itself into a high impact-low visibility bank.
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