By Shritama Bose and Urvashi Valecha
As Yes Bank kicks off its Rs 15,000-crore further public offer (FPO), the market is interpreting the absence of a lock-in clause for FPO investors as an indication of returning to business-as-usual for the bank. This clearly means the bank has come some way from four months ago, when the government and the central bank had orchestrated the coming together of financial sector bigwigs to the rescue of the capital-starved bank.
Seventy-five percent of their money, as also that of all other retail investors as on March 13, had been locked in for the next three years then. In other words, there are two separate sets of investors in the same bank, governed by different rules.
Yes Bank MD & CEO Prashant Kumar said that there is no reason to say there are two separate classes of investors as there is no lock-in for anybody who bought shares after March 13. “As the reconstruction scheme came into effect on March 13, so as on that date whatever was the shareholding for any of the investors, 75% of it was locked. If such an investor who had 75% locked-in as on March 13 bought shares on March 14 or 15, there is no lock-in (on those shares). So, there are no two separate classes,” Kumar told FE.
While market participants agreed that this FPO might end up creating two separate sets of shareholders in Yes Bank, they also pointed to the difference in circumstances then and now. “In a sense, it does create separate categories of investors, but what happened in March was not a normal public offer. For the rescue of the bank to be sustainable, it was important that those institutions remained invested in the bank,” said a market participant, adding, “that deal was structured in a very special manner, but what is happening is a regular FPO.”
Another market player pointed out that the reconstruction process in March actually did equity-holders a favour by not writing off the value of their holding altogether. “There will be two classes and there’s a reason for that. The government brought in money and the shareholders got the benefit of that. Ideally, they should have extinguished that capital and issued new shares. But, they retained that capital and that is why they put in the lock-in to make the restructuring successful,” he said. For now, the regular FPO signals a return to regular banking for Yes Bank.
On Monday, the shares of Yes Bank ended at Rs 22.10, down 13.33% from their previous close on the BSE.