YES Bank share price closed lower for the second consecutive session after the lender revealed names of potential investors on Saturday which failed to attract investors' interest. YES Bank share price was the top loser on both Sensex and Nifty today. While the stock lost 7.10% to Rs 59.50 on Sensex, it fell 7.57% to Rs 59.20 on Nifty. Share price of YES Bank fell up to 7.42% to Rs 59.3 intra day on BSE.
On November 29, the mid cap stock closed 2.49% lower at Rs 68.30 compared to its previous close of Rs 70.05. It has fallen 66.69% in last one year and saw 67.37% in value since the beginning of this year. The stock has lost 15.13% in last three sessions. The enthusiasm behind the announcement over fund raising options seems to have faded with analysts raising concerns over absence of well known names in the list released by the bank on Saturday.
The concerns were further compounded by the reports that put credibility of the lead investor in doubt. The bank mentioned entrepreneur Erwin Singh Braich/SPGP Holdings as a key investor with whom talks are ongoing and expected to be concluded shortly.
The lender said Braich/SPGP Holdings expressed agreement/ willingness to subscribe to equity shares of the bank by infusing $1,200 million to shore up capital. Hong Kong-based SPGP Holdings which has committed nearly Rs 8,600 crore ($1,200 million) could not pay the earnest money to convey its seriousness in buying the sick apparel maker Reid & Taylor (R&T) in January this year.
The Mumbai bench of National Company Law Tribunal had dismissed the application of SPGP Holdings and instead gave a new investor CFM Asset Reconstruction 48 hours to deposit at least Rs 2 crore as the earnest money. The two Judge bench of Justice Bhaskara Mohan and Justice V Nallasenapathy expressed anguish after SPGP Holdings said it could not pay the earnest money required by the court more than a week after joining the race to take over R&T.
"This bench is making all the possible efforts to somehow revive the company in the interest of all the parties concerned but at the same time the manner in which the Hongkong-based Company has come forward and painted a rosy picture to take over the corporate debtor and later could not raise up to the expectation of this Bench, as projected by them, this bench expresses anguish for the same" the NCLT bench said.
Additionally, little is known about the largest investor, Erwin Singh Braich, who is expected to bring in nearly 60% of the $2 billion funds for YES Bank.
The credibility of Braich also becomes doubtful as a report by BloombergQuint said he went through bankruptcy proceedings roughly 20 years ago. Not much is known about the companies he has founded and promoted.
Other parties who showed willingness for fund infusion, according to the bank, were Discovery Capital ($50mn), GMR Group and Associates ($50 mn), Rekha Jhunjhunwala ($25 mn) , Aditya Birla Family Office ($25 mn) , Ward Ferry ($30 mn) and Citax Holdings Ltd & Citax Investment Group ($500 mn).
Today reports emerged that Capital International, part of the $1.87-trillion US-based Capital Group, has committed to invest at least $120 million in the private sector lender. The bank on Saturday mentioned a top tier US Fund House had expressed willingness to subscribe to equity shares of the bank for $120 mn and announced that the name would be disclosed early next week.
By Aseem Thapliyal