In an Initial Public Offering (IPO), a company offers its shares to the public for the first time. However, when an already listed company offers its shares to the public, the issue is called a Follow-on Public Offer (FPO).
Like an IPO, this issue can be in the form of new shares or an offer for sale from the promoter or major investor group. Yes Bank is issuing new shares to raise additional capital. The bank is expected to raise about 15,000 crores in this issue. You can refer to the FPO Prospectus for details.
The issue price range is Rs 12 to Rs 13 and you can apply in multiples of 1000 shares. The maximum application amount for a retail investor is Rs 2 lacs. Therefore, you can apply for up to 15 lots of 1000 shares each at the cut-off price of Rs 13.
Indicative timetable
| Event | date |
|---|---|
| Issue Period | July 15th to July 17th |
| Finalisation of allotment | July 22nd |
| Initiation of Refunds | July 23rd |
| Credit of shares | July 24th |
| Listing | July 27th |
| Mandate end date | Yet to be confirmed |
How do I apply for the Yes Bank FPO?
You can apply for the Yes Bank FPO on Console using any supported UPI app. The FPO will be available on Console when the issue opens on July 15th.
Once you have entered your bid on Console, you will receive a mandate collect request on your UPI app. On acceptance of the mandate, the bid amount will get blocked in your bank account. The process to apply is the same as it is for an IPO. Read more.
Will the shares allotted in the FPO be locked in?
No, the shares allotted in the FPO will not be locked in. You will be able to freely sell these shares of Yes bank.
Is there any discount available for retail investors or existing shareholders?
No, there isn’t a discount for retail investors or existing shareholders. A discount of Re 1 for employees of Yes bank has been fixed by the board of the company - check here. Employees who seek to apply in the reserved category to avail the discount will only be able to use Net banking ASBA.
Will my buy average price be affected?
Your buy average price will be affected only if you apply for the issue and get allotment. It will be calculated on FIFO basis.
How do I decide the price at which I should apply?
You are more likely to receive allotment if you apply at the cut-off (market price) or the highest price in the band. If the cut-off is lower than the price you have selected, you will automatically get allotment at the lower price. In a book-building issue like this, if you make an application at Rs 13, but the cut-off price is at Rs 12, you will get the allotment at Rs 12 for the quantity you specified.
Does this mean the price of Yes bank will fall to Rs 13 when the FPO shares are listed?
It is possible that the share price of Yes bank could reduce from the Current Market Price (CMP) of around Rs 25 since the current holdings will be diluted by the issue of new shares in the FPO. However, it is difficult to assign a value on how much discount the market could be expecting in the CMP. On Friday, July 10th, 2020, traders were willing to borrow shares of Yes bank around Rs 8 each and to short sell them at the CMP which means they might be expecting the price to fall to around Rs 17.
You can check the Securities Leding and Borrowing (SLB) Rate here on NSE’s website.
