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SEBI probing role of Goldman Sachs, Motilal Oswal and CLSA in Yes Bank QIP fiasco

15 September, 2016

The Securities & Exchange Board of India (SEBI) is probing the role of investment bankers in Yes Bank’s planned qualified institutional placement (QIP) of shares after the bank deferred the issue on back of extreme volatility in its scrip. 

The Economic Times reported that SEBI is looking into the stock exchange announcement of the lender pertaining to the planned equity placement, the surge in the bank stock in the run-up to the issue date and the subsequent intra-day fall that led to the issue being called off. Goldman Sachs, Motilal Oswal and CLSA were advisers to the issue. 

The issue’s managers are being questioned by the capital market regulator on their failure to take note that the bank hadn’t pre-intimated the stock exchanges about the impending board meeting.

E-mails queries sent to Goldman Sachs and Motilal Oswal did not elicit a response while CLSA declined to comment.

In April, the bank said its board has approved raising over Rs 16,500 crore ($2.47 billion) through issue of equity capital as well as debt securities in one or more tranches.

Again in June, bank’s managing director Rana Kapoor said it is likely to raise $1 billion (Rs 6,727 million) from overseas investors in the current financial year as it has recently got government approval for increasing foreign investment to 74%.

However, no communique was issued two working days prior to April 27 — as is the regulatory requirement — informing that there would be a board meeting, added the report.

Last week, the bank deferred its plans to raise $1 billion, citing extreme volatility in trading due to misinterpretation of new QIP guidelines.

“We have called all the main bankers involved in the Yes Bank QIP (qualified institutional placement). We are looking at the entire sequence of events and whether there has been any violation of securities laws,” the report said citing a SEBI official.

As part of the probe, SEBI is examining the complete trading details of Yes Bank shares for the past few months with a detailed report to be submitted to a member in the next few days.

“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 following the crash of its stock.

Yes Bank stock had closed 5.32% down at Rs 1,330.65 on the BSE. Its stock that was trading at Rs 855 in the beginning of March surged to Rs 1,440 in the first week of September. 

“Since merchant banks are registered intermediaries with SEBI, they are legally bound to look at all compliance on public offerings and M&As,” the report cited the SEBI official.

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SEBI probing role of Goldman Sachs, Motilal Oswal and CLSA in Yes Bank QIP fiasco

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