Deal of the Year 2014: Yes Bank Raises US$500m through QIP

Deal of the Year 2014: Yes Bank Raises US$500m through QIP

In May 2014, YES BANK, India’s fourth largest private sector bank, successfully closed a qualified institutions placement to raise US$500m. We take a closer look at this major deal

YES BANK, India’s fourth largest private sector bank, is the outcome of the professional and entrepreneurial commitment, vision and strategy of its founder, Rana Kapoor, and his top management team, to establish a high quality, customer-centric, service-driven, private Indian Bank catering to the Future Businesses of India.

YES BANK has adopted international best practices, the highest standards of service quality and operational excellence and offers comprehensive banking and financial solutions to all its valued customers. YES BANK has a knowledge-driven approach to banking and a superior customer experience for its retail, corporate and emerging corporate banking clients. YES BANK is steadily evolving its organisational character as the professional’s bank of India, with the uncompromising vision of “Building the Best Quality Bank of the World in India by 2020!”

YES BANK’s US$500m QIP

YES BANK’s US$500m qualified Institutional placement, on 30 May 2014, was among the first significant capital raising in India after the formation of the new government which took oath on 26 May 2014. The QIP was immaculately timed to capitalise on the revival of economic sentiments in India under the new government’s leadership. The QIP was also a landmark trendsetter in the industry, and there were many fund raising deals which took place in the weeks after YES BANK’s QIP was concluded.

Details of the Deal

• Issue of 5.35 Crore shares at Rs550.00 per share (at a premium over yesterday – 29 May 2014 closing price of NSE – INR 548.15) aggregating to US$500m, resulting in a dilution of 12.9% on the expanded capital base.

• Increases Total Capital Adequacy to over 18% and Tier I Capital of over 13%, ensuring that the bank is well positioned for growth.

• Eligible Capital Funds over Rs15,000 crores, Shareholder funds cross Rs10,000 crores.

• Post issue book value of approximately Rs243 per share

• QIP oversubscribed by over 5X, representing aggregate demand of over US$2.5bn.

YES BANK, India’s 4th largest private sector bank, announced in May 2014 that it had successfully closed a qualified institutions placement to raise US$500m (Rs2942 Crores). The bank will issue 5.35 crores shares at Rs550.00 per share, a premium to the previous day’s Closing Price (NSE – INR 548.15). The placement increases the overall capital adequacy to over 18% and Tier I Capital of around 13%. The additional capital now brings the total shareholders’ funds to Rs10,033 crores, and the total capital funds to Rs15,154 Crores pursuant to the QIP.

The issue opened with share sale of US$500m and was oversubscribed over five times, generating an aggregate worldwide demand of US$2.5bn. The overall allocation to foreign institutional investors is approximately 40% from USA/ Europe, 30% from Asia, and domestic insurance companies and mutual funds accounting for the balance approximate 30% ensuring a well-diversified representation and demand from all significant global investors across the world. The capital raising comes on the back of record profits of Rs1,617.78 Crores delivered by the bank in FY 2013-14.

On the successful completion of the equity issuance, Mr Rana Kapoor, Managing Director and CEO said, “YES BANK has once again demonstrated its ability to augment capital backed by its robust financial performance across economic cycles. This reinforces the strong faith of high quality international and domestic institutional investors in the business and financial model of YES BANK. This capital raising has been consummated to further augment our core Tier I capital base/capital adequacy, and enhance the long-term resources of YES BANK ensuring that the bank is extremely well positioned to benefit from significant growth opportunities that will accelerate with the improving political and economic environment in India.”

Kapoor added, “The capital Book Running Lead Managers (BRLM) – GS, Deutsche, HSBC, UBS, JM and Motilal Oswal, did an exemplary and well timed global transaction of significant magnitude for YES Bank, and potentially, a catalyst for future global capital raisings from our country – India. GS was instrumental in bringing the largest anchor investor to this global capital raising transaction”.

Goldman Sachs (India) Securities Private Limited, Deutsche Equities India Private Limited, HSBC Securities & Capital Markets (India) Private Limited, JM Financial Institutional Securities Limited, Motilal Oswal Investment Advisors Private Limited, and UBS Securities India Private Limited were the Book Running Lead Managers to the QIP issue. The Legal Advisors to the transaction were Linklaters, Allen & Overy, Amarchand Mangaldas & Suresh A. Shroff & Co., and Luthra & Luthra Law Offices. The Statutory Auditors were S. R. Batliboi & Co. Chartered Accountants.

Web: www.yesbank.in