In a move that took investors and analysts by surprise, Yes Bank on Thursday decided to defer an ongoing qualified institutions placement (QIP) issue for raising up to $1 billion. The bank cited misinterpretation of new QIP guidelines for the move.
“Due to extreme volatility during today's trading day because of misinterpretation of new QIP guidelines, YES Bank has been advised by its appointed Merchant Bankers to defer its proposed QIP,” the bank said in a statement to the stock exchange.
Yes Bank shares crashed 5.32 per cent to end at Rs 1,330.65 per share on the BSE on Thursday. The bank, led by chief executive officer Rana Kapoor, had set the base floor price at Rs 1,371.84 per equity share for the QIP that opened on Wednesday.
On Wednesday, Yes Bank’s capital raising committee passed resolutions approving the QIP. The bank had said the capital raising committee of its Board of Directors would consider and determine the price for equity shares of the bank to be issued in the QIP, in accordance with the relevant provisions of SEBI regulations and Companies Act.
On Thursday, Yes Bank in an exchange filing, however, said SEBI regulations requires a notice of at least two clear working days for meetings of the board of directors for determination of issue price in connection with a fund raising. This comes after eight companies successfully used the QIP route to raise Rs 880 crore this year, according to Bloomberg data.
While the move left a lot of questions unanswered, Shriram Subramanian, Founder of proxy advisory firm, ingovern said, “It seems that the bank ‘s existing investors have posed uncomfortable questions to the bank especially on governance related issues.”