InvestorQ : What about the equity investors of Yes Bank? Do these people actually gain or lose from the Yes Bank bailout transaction?
Katherine Gonsalves made post

What about the equity investors of Yes Bank? Do these people actually gain or lose from the Yes Bank bailout transaction?

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Rutuja Nigam answered.
10 months ago
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There are two sets of investors you must be familiar. Firstly let us look at the banks like SBI, ICICI Bank, HDFC and Kotak Bank that are bailing out Yes Bank for an equity stake. What about the large banks that put in the capital to bail out Yes Bank? They may not have much to worry. The stock price is already 4-5 times their allotment price of Rs.10. Even assuming that they can only sell one-fourth of their holdings, they would more than recover their investment. SBI and others may still stay invested in Yes Bank but they are most likely to recover their capital with a healthy return. The banks that participated in the restructuring of Yes Bank don’t have much to worry. Existing investors both retail and institutional, could be the real losers in the bargain. Here is why the existing investors will be losers. Equity investors will pay a big price for the bailout in two ways. First, most investors may have bought the stock at higher levels. Yes bank had touched a peak of Rs.392 in August 2018 before falling all the way to Rs.6 this month. They are likely to be stuck in the stock at higher prices. The bigger catch is that now they cannot even exit the stock fully if they had been holding the stocks in their demat account as on 13th March. Only 25% of the shares (above 100 shares) will be available for sale. The balance 75% shares will be locked in for 3 years. Both the traders and the investors in Yes Bank may pay a huge price for the bailout. They may end up losing in the deal.

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