YES Bank gets a big no from investors as lock-in ends

Three years ago, a bunch of peer banks brought Yes Bank back from the brink of collapse through a rescue plan. The plan involved an infusion of ₹10,000 crore into the troubled private-sector lender by eight financial entities at ₹10 per share.

The bank’s capital was shored up to the minimum regulatory levels and the lender began to fix its balance sheet in earnest.

But two of the conditions of the rescue plan have come back to haunt Yes Bank’s investors. The plan had mandated that 75 percent of the bank’s equity will be under a three-year lock-in from the commencement of the reconstruction scheme.

What this means is that the rescue investors, led by the State Bank of India (SBI), have to hold 75 percent stake for three years. This lock-in will end on March 13 and analysts expect a large supply of the bank’s shares to hit the counters.

According to a Reuters report, SBI is looking to bring down its stake once the lock-in period ends.

“The end of the lock-in period is a big overhang for the stock and it is very difficult to make a call right now. There is going to be a lot of selling pressure in the coming months,” said Ashutosh Mishra, head of research for institutional equities, Ashika Stock Broking Ltd.