Yes Bank blames forced stake sale for stock crash

Mumbai: lender Yes Bank on Wednesday said the steep decline in its stock price was mainly due to forced sale of 10 crore equity shares on the back of invocation of pledged shares by a large stakeholder, representing 3.92 per cent of its equity share capital. The lender’s shares had slumped 23 per cent a day earlier. Yes Bank’s dollar bonds also slumped a record 5.5 cents to 80.9 cents, the lowest since the bonds were sold in 2018. The bank has sizable exposure to cash-strapped NBFCs, which has created a fear among investors.

In a filing to the exchanges during the day, the bank said a large stakeholder invoked shares pledged with it, following which the entire pledge stood extinguished and also allayed fears stating that its financials are strong and its liquidity position is well in excess of regulatory requirements.

“Over the past few days, our Yes Bank Promoter Group Companies-Morgan Credits Pvt Ltd (MCPL), and Yes Capital had to sell their highly precious promoter shareholdings in Yes Bank at deeply discounted prices. The decision to divest our shares at the undervalued share price levels, considerably below even the book value (below 0.5 multiple) was taken under compelling circumstances with the sole purpose of deleveraging MCPL and YCPL. As long term shareholders and firm believers in the bank’s future value creation potential, we do not consider these valuations to be reflective of an otherwise fundamentally solid bank with significant franchise value,” said a statement from Yes Capital and MCPL.

“To our extreme disappointment, we were informed late Tuesday, October 1, that Reliance Nippon Life Asset Management Company Ltd (RNAM) vide appointed trustee Milestone had invoked and sold all our balance pledged promoter shares for MCPL in the open market. These were shares pledged by our father Rana Kapoor to support the borrowings of MCPL, a company owned by his three daughters for investing in startup ventures…The total prepayments (including accrued interest) to RNAM by MCPL amount to approximately Rs 1145 crore well before the due date of April 2021,” said the statement.

Meanwhile, Co-Promo-ter, the Ashok Kapur family has affirmed full support to Yes Bank, following Co-Promoter Rana Kapoor’s near complete exit from the bank. “We stand firmly behind Yes Bank and have complete and full faith in the leadership and management of the bank,” Ashok Kapur’s daughter Shagun Gogia said. The family’s ownership is over 8.7 percent and very miniscule part of it is pledged, she said.

On Monday too, shares of Yes Bank had taken a beating dropping 15 per cent as investors worried over its exposure to Indiabulls Housing Finance. And on Tuesday, the stock lost nearly 30 per cent intraday before closing the session down by 22.8 per cent at Rs 32 making it the worst hit stock on both the Sensex and Nifty.