Madhu Kapur Group Gives Up Promoter Status At Yes Bank
As per the latest available stock exchange data, Madhu Kapur’s total stake in Yes Bank stood at 1.12 percent as on March 31.
The family of Yes Bank Ltd.’s late co-founder Ashok Kapur has given up its status as one of the promoters of the bank, putting an end to a turbulent history between the two.
Kapur’s wife Madhu Kapur, their children, Shagun Gogia Kapur and Gaurav Ashok Kapur, and Mags Finvest Pvt Ltd (collectively known as Madhu Kapur and group) have agreed to be reclassified as public shareholders of the bank, a stock exchange notification by Yes Bank said on Saturday.
As per the latest available stock exchange data, Madhu Kapur’s total stake in Yes Bank stood at 1.12 percent as on March 31. Mags Finvest held 0.3 percent in the bank. Rana Kapoor, the co-founder and former chief executive of Yes Bank, holds no stake in the bank, either by himself or through proxy firms such as Yes Capital (India) Pvt Ltd and Morgan Credits Pvt Ltd, according to the stock exchanges. He is yet to be declassified as promoter.
A Bitter Battle
The Kapoor and Kapur families fought a bitter legal battle, which began in 2013.
A key point of contention was representation on the bank’s board. Madhu Kapur argued that after her husband's death, the family was entitled to nominate a representative on the bank’s board. The family was keen that Gogia join the board. However, Rana Kapoor, who was then heading the bank, did not permit this. His position, supported by the board at the time, was that Gogia did not have the requisite experience.
In 2015, the Bombay High Court ruled in favor of the Kapur family by saying that the promoters must jointly nominate three directors on the board. This gave Madhu Kapur more say in the bank's board appointments.
Despite that Gogia was not permitted a seat on the board.
Twists & Turns
Even as the case was in appeal, a sudden turn of events changed circumstances.
In 2018, the Reserve Bank of India asked the board to reconsider Rana Kapoor's reappointment chief executive officer. In September 2018 the bank’s board announced that it was withdrawing its request for an extension of Kapoor’s term.
Kapoor stepped down as CEO of the bank he co-founded in January 2019. After his exit, Yes Bank’s board appointed Ravneet Gill as the bank’s chief executive.
With Kapoor’s exit as CEO, he now needed the support of the Madhu Kapur family to stay on the board or have a representative on the board, since the court had given the two families joint nomination rights.
It was at this time that two families reached an agreement, allowing Gogia to finally join the board of the bank her father co-founded. Ravindra Kumar Khanna was the other nominee of the Indian partners who joined the bank’s board.
Events continued to spiral and by October 2019, Kapoor lost all his shareholding in Yes Bank.
Yes Bank Reconstructed
With Gill in the CEO position, Yes Bank made multiple attempts to raise at $2 billion to cover for the bank’s large bad loan pool. However, these attempts failed.
In March, the RBI had suspended Yes Bank’s management and board as the lender’s financial position deteriorated significantly, to the point of non-viability. The regulator appointed Prashant Kumar as the new chief executive and Sunil Mehta as the non-executive chairman. The regulator also initiated a rescue plan for Yes Bank where State Bank of India and a clutch of private sector lenders infused equity into the bank.
Yes Bank is now owned by a collective of Indian lenders.
For the January-March quarter, Yes Bank reported a net profit of Rs 2,629 crore after it wrote-back Rs 8,415 crore in additional tier-1 bonds. The new management and board are looking to raise another Rs 15,000 crore by June 30, to diversify its ownership and procure growth capital.