Nearly a year after the Reserve Bank of India asked him to step down as the head of Yes Bank Ltd., sending its stock into a tailspin, co-founder Rana Kapoor’s stake in the private lender fell to below 1 percent.
According to a stock exchange notification by the bank, the steep fall in its stock price on Tuesday was owing to the forced sale of 10 crore equity shares, or 3.92 percent of the bank’s share capital, triggered by an invocation of pledge on the equity shares of a large stakeholder. The equity shares were pledged by Kapoor against non-convertible debentures issued by his company Morgan Credits Pvt Ltd, which were invoked by Reliance Nippon Life Asset Management.
The sale, which happened on Tuesday, sent the bank’s stock crashing 22.8 percent to Rs 32 per share, the lowest price in a decade. The lender has wiped off nearly 90 percent of its market value since Sept. 17, 2018, when the RBI denied Kapoor another term over divergence in bad-loan disclosures.
This is the third such sale of the bank’s promoter stake after pledged shares were invoked. On Sept. 19, Kapoor’s privately held Morgan Credits Pvt Ltd. sold 2.3 percent and then a week later, Yes Capital (India) Pvt Ltd. offloaded 1.82 percent.
Morgan Credits sold its stake to raise Rs 337.3 crore to prepay Reliance Nippon Life Asset Management Company Ltd. as it had issued non-convertible debentures worth Rs 1,160 crore in April 2018. Yes Capital prepaid Rs 241.52 crore to Franklin Templeton Asset Management (India) Pvt Ltd. against zero-coupon NCDs.
With the current sale, the stakeholder’s entire pledge has been extinguished, Yes Bank said in its statement on Wednesday, adding that the lender’s financial and operating metrics remain “intrinsically sound and stable”.
We are highly dejected that our family shareholding in Yes Bank was sold at such dismal price levels, despite the bank having created long term shareholder value and over 20,000 jobs over the last 15 years. We will continue to focus our energies on growing the start-up ventures incubated by us where we see potential for meaningful value creation in the long term.Statement By Rana Kapoor Family
The Kapoor family clarified that the sale of shares in no way reflects their views on Yes Bank and that they believe that the bank’s management is firmly positioned to continue on the growth path and deliver value for all shareholders.
Kapoor had founded Yes Bank in 2003, along with Ashok Kapur and Harkirat Singh, with a capital base of Rs 200 crore after the trio sold their combined 25 percent in Dutch lender Rabobank’s Indian arm they had set up.
Before the bank could take off, Singh left due to differences among the major shareholders on who would lead the bank. Kapur was killed in the November 2008 Mumbai terror attack. Since then, Kapoor has been the only one among the founding team to still be in a leadership position at Yes Bank.
With Kapoor’s shareholding now falling below 1 percent, the family of late Ashok Kapur is the largest shareholder in the bank.
“The promoter family of late Ashok Kapur stands firmly behind Yes Bank and has complete and full faith in the leadership and management of the bank,” Shagun Kapur Gogia, additional director (non-executive non independent) at Yes Bank, told BloombergQuint in a text message on Wednesday.
Dollar bonds of Yes Bank, which has sizable exposure to cash-strapped non-bank lenders, slumped a record 5.5 cents to 80.9 cents on the dollar on Wednesday, the lowest since the bonds were sold in 2018.
Yes Bank’s gross advances aggregated to Rs 2.32 lakh crore on Sept. 30 versus Rs 2.42 lakh crore three months earlier. Its CASA ratio improved to 30.8 percent during the period versus 30.2 percent on June 30.
(Updates an earlier version to reflect the latest shareholding of the Rana Kapoor family in Yes Bank)
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