India : Yes Bank shelves up to $1 billion share sale

MUMBAI : Yes Bank, India’s fifth-biggest private sector lender by assets, on Thursday shelved an up to $ 1 billion share sale to institutions, blaming trading volatility it said had been induced by misinterpretation of rules.

The so-called qualified institutional placement (QIP) launched late on Wednesday was pulled on the advice of merchant bankers, the lender said in a stock exchange filing, after Yes Bank shares fell 5.2 percent in a Mumbai market that rose by 0.4 percent.

The shares fell to 1,328.25 rupees on Thursday, compared with the QIP’s range of 1,350-1,410 rupees..

Yes Bank Chief Executive Rana Kapoor said in a phone interview that the sale would be relaunched at a later date but “definitely before” March 2017.

The stock exchange filing said that the share price volatility that prompted the shelving of the sale was because new rules for QIPs had been misinterpreted.

“The QIP guidelines for some amazing reason require the QIP to be kept open for three days, even after it is oversubscribed,” Kapoor said.

He did not say whether the issue had been fully subscribed but did describe the response as “fantastic”.

IFR, a Thomson Reuters publication, separately reported that the sale had yet to reach its target.

An hour before it announced the sale’s postponement Yes Bank had told the stock exchanges that it would have to keep the issue open until Friday to comply with the rules.

Yes Bank and its private sector peers have been expanding their loan books much faster than state-run rivals burdened by bad loans. The bank, which raised $ 500 million from a share sale more than two years ago, has said that it remains well-capitalised.

Goldman Sachs and Motilal Oswal were the global coordinators and bookrunners for the QIP, alongside HSBC, JM Financial, Nomura, Religare, SBI Capital and Yes Securities, according to IFR.