YES Bank signs agreement with White Oak to sell stake in MF arm

Private bank's mutual fund business was rudderless for while with uncertainty over bank's former leadership

YES Bank has agreed to sell its stake in YES Asset Mana­gement Company (AMC) and YES Trustee to GPL Finance and Investments (GPLFI), which is owned by Prashant Khemka-backed White Oak Investment Management. 

Khemka was formerly the chief investment officer and lead portfolio manager for Goldman Sachs’ India Equity Fund at Goldman Sachs Asset Management. White Oak is a Mumbai-based boutique investment management and advisory company.

YES AMC had Rs 56.97 crore worth of average assets in the June quarter, showed data from the Association of Mutual Funds in India. The AMC, which had received approval to launch schemes in 2018, had so far managed to float three debt-oriented mutual fund (MF) schemes.

These included a liquid fund, an overnight fund, and an ultra-short-term fund.

Soon after the AMC received an approval from the Securities and Exchange Board of India (Sebi) to start its MF business, YES Bank founder and former managing director Rana Kapoor’s bid to get an extension from the Reserve Bank of India (RBI) for his post was turned down.

The bank’s foray in the AMC business remained in limbo amid leadership uncertainty, and the bandwidth of new management also focused on handling issues in the bank, including asset quality concerns.

YES Bank’s decision to sell the AMC business is part of its strategy to focus on its core business. In a stock exchange disclosure, the lender revealed the AMC’s contribution to the bank’s bottom line and net worth, which were negligible in 2019-20 (FY20). 

YES AMC had revenue worth Rs 3.3 million and net worth of Rs 50 crore in FY20.

Banking industry players say selling the AMC business will help the lender preserve capital, as the asset manager had reported losses in the past few financial years.

 Earlier this year, YES Bank was taken over by a group of lenders led by the State Bank of India. In March, the bank raised Rs 10,000 crore from nine marquee financial institutions. Last month, it raised another Rs 15,000 crore through a follow-on public offering.

Meanwhile, the MF industry has been going through a challenging phase, with equity schemes seeing the first instance of negative flows after four years. In July, schemes saw negative flows of Rs 2,480 crore, which was also the largest quantum of negative flows seen in seven years.