In July, when Yes Bank Ltd announced a follow-on public offer to raise Rs 15,000 crore in an effort to shore up its mandatory capital requirements, several research agencies advised investors to avoid the issue like the plague.
Though Kotak Mahindra Capital Co. was the lead manager to the issue, its research arm Kotak Securities Ltd did not rate the offer. Nirmal Bang Securities Pvt. Ltd actually asked investors to steer clear of the offer, while Macquarie Group Ltd indicated that the FPO would affect the Yes Bank stock adversely, estimating that its target price would dip to Rs 8.
Yet the level of interest that the FPO evoked was surprising, to say the least. This, at a time when the bank continues to look vulnerable. Though the June quarter results show a small uptick over the previous quarter, Yes Bank has miles to go before it is out of the woods.
The FPO, priced at Rs 12-13 a share, or a 53% discount to the then market price of Rs 25.50, evoked a