Yes Bank Stock Surges After Receiving Binding Offer Of $1.2 bn

New Delhi, October 31:  Equity shares of Yes Bank surged around 24 per cent on Thursday after the private bank informed the stock exchanges that it had received a binding offer of $1.2 billion from a global investor.

The proposed investment as a part of Yes Bank’s fund-raising efforts will be done through the issuance of fresh equity shares, subject to regulatory approvals as well as approval from the bank’s board and shareholders, the private lender said in its BSE filing. 

A binding offer refers to an offer made by a bidder to acquire a target company after the due diligence phase of a sale process is complete. This offer constitutes a formal contract between the bidder and seller, should the seller accept the bidder's terms.

Yes Bank added that the bank had received strong interest from multiple foreign and domestic private equity and strategic investors for the capital raise and that it was in advanced discussions with other global and domestic investors as well.

Soon after the announcement, the shares of the Yes Bank rallied by over 38 per cent to trade at Rs 78.7, compared to its previous day’s close of Rs 56.8. However, the price later corrected and the share closed at Rs 70.3 per share, still 23.77 per cent higher than the previous day’s close. The bank is expected to post its Q2 results on Friday, which would now be watched keenly.

Santosh Meena, Senior Analyst, TradingBells, said the Yes Bank stock had rallied 171 per cent from the low of 29 which was made on October 1, which was the last day of selling of pledged shares. 

“It rallied about 27 per cent in today's trading session after news that it received interest from strong global players for equity infusion which is a major requirement for the bank. Technically Rs 79-81 is a critical resistance zone which is also near the previous qualified institutional placement (QIP) price of Rs 87. Therefore, it is difficult to see further upside from here in the near term and it will post its Q2 results tomorrow which may cause some selling pressure,” he said.

Meena added that in the short term, investors should avoid any long position at the current level while a correction in the Rs 60-55 zone will be a better opportunity to take a risk as a long term bet.

Yes Bank has been in turmoil over the last year ever since the RBI rejected an extension for former CEO and co-founder Rana Kapoor. Its stock had fallen to a decade low level of Rs 29 in the beginning of October on concerns of the bank’s ability to raise capital. That was despite it telling the stock exchanges in September that it had received strong interest from multiple foreign as well as domestic private equity and strategic investors.