Rana Kapoor's daughters 'dejected' with sale of his stake in YES Bank

Morgan Credits (MCPL) and YES Capital (India) (YCPL) — the promoter entities of YES Bank — on Wednesday expressed “dejection” on Reliance Nippon Life AMC’s (RNam) decision to invoke and sell pledged shares of Rana Kapoor through its debenture trustee, Milestone Trusteeship.

“These were pledged by our father Rana Kapoor to support the borrowings of MCPL, a company owned by his three daughters for investing in start-up ventures in our capacity as women entrepreneurs,” said the press note issued by MCPL and YCPL.

This sale of Kapoor’s shares meant that he no longer has any stake in the bank he founded in 2004.

“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 during 15 years,” it added.

On Tuesday, RNam had directed its debenture trustee to sell 100 million shares of YES Bank at price of Rs 35.29, which translated to Rs 352.9 crore of shares. According to people in the know, the reason for the share sale might have been the sharp erosion in value of promoter shares and to ensure optimal recovery.

According to the press note, the total prepayments (including accrued interest) to RNam by MCPL, amounts to Rs 1,145 crore. Queries sent to RNam didn't elicit any response at the time of going to press.

Both MCPL and YCPL are owned by Kapoor’s three daughters — Roshni Kapoor, Radha Kapoor, and Rakhee Kapoor-Tandon.

The letter highlighted that even shares sold by YCPL and MCPL was due to “compelling circumstances” to de-leverage the promoter entities. 

Even though shares were sold by the two promoter entities and RNam at “deeply discounted prices”, the promoter entities wished to clarify that it, in no way, reflected their views on the bank’s fundamentals.

It described YES Bank as “a fundamentally extraordinary financial institution built so assiduously and painstakingly by our father Mr. Rana Kapoor...” The share sales have been used to fully deleverage YCPL, and clear 61 per cent of outstanding debentures of MCPL.

After the recent share sales, the family’s stake in the bank has shrunk to around 1 per cent, showed an analysis of exchange data. The YES Bank stock has taken a heavy beating of late. The scrip has slumped over 80 per cent year-to-date. 

Concerns over asset quality, coupled with worries over possible exposure to stressed corporate groups and the troubled real-estate sector, have dampened investor sentiment.

More recently, promoter entities’ decision to sell the shares for de-leveraging has added to selling pressure, with broader markets also weak.