Buzz over stake sale by YES Bank promoters gets louder

The buzz over YES Bank promoters looking at the possibility of selling stake to L&T Finance is getting louder in the market.

As neither the bank or the non-banking finance company (NBFC) categorically denied the speculation, YES Bank shares gained seven per cent on the BSE on Wednesday, partly helped by its quarterly results. L&T Finance Holdings’ shares, however, didn’t show much enthusiasm and ended 0.5 per cent up in Wednesday’s trade.

“It is not a board matter,” Rajat Monga, chief financial officer and senior group president (financial markets) at YES Bank, said while responding to queries on the deal.

A spokesperson of YES Bank declined to offer any comment. “The issues mentioned are of speculative nature, and YES Bank would not wish to respond to speculation,” the spokesperson said in an e-mailed response.

“There has been no discussion with us on this matter. No one has approached us so far,” Shagun Kapur Gogia, daughter of Madhu Kapur, told Business Standard. Rana Kapoor was not immediately available for comment.

When asked about inorganic growth plans, N Sivaraman, director, L&T Finance, said “It’s premature to talk about it.”

YES Bank promoters held 25.55-per cent stake in the bank at the end of March, 2014. Rana Kapoor, co-founder, managing director and chief executive officer of YES Bank, directly held 5.55 per cent stake, while his sister-in-law, Madhu Kapur, and her family owned 9.74 per cent. Madhu Kapur is the widow of the bank’s other co-founder, Ashok Kapur. YES Capital, Morgan Credits and Mags Finvest – all classified as promoter group companies – held 4.19 per cent, 3.90 per cent and 2.17 per cent shares, respectively.

Earlier, media reports had claimed L&T Finance Holdings, which failed to get a banking licence, was in talks with the promoters of YES Bank to buy a stake in it.

Industry analysts pointed out that even if a deal is negotiated between L&T Finance Holdings and promoters of YES Bank, they will need permission from the Reserve Bank of India (RBI) to execute the transaction. Analysts also felt it would be difficult to convince the banking regulator since it has ignored the application of L&T Finance Holdings in this round of allotment of new bank licencing.

It also appears to be difficult for L&T Finance Holdings to persuade both Rana Kapoor and Madhu Kapur to sell their stake.

Madhu Kapur had moved the Bombay High Court alleging that her right as co-promoter of YES Bank was violated and she was not consulted when the bank appointed three new directors on its board.