Paytm Said To Be In Talks To Buy Stake In Yes Bank From Rana Kapoor
A potential Paytm-Yes Bank deal will be subject to approval from RBI, as Vijay Shekhar Sharma owns a stake in Paytm Payments Bank.
Vijay Shekhar Sharma’s Paytm is in talks to buy stake in Yes Bank Ltd. from the private lender’s co-founder Rana Kapoor, people aware of the development said.
Kapoor has held preliminary discussions with Paytm, the people said.
The structure of a Paytm-Yes Bank deal would depend on approval from the Reserve Bank of India, given that Sharma already owns a stake in Paytm Payments Bank, the people said.
Paytm declined to comment on the matter. Rana Kapoor could not be reached for comments. Banking sources declined to comment whether plans are afoot by Rana Kapoor and family to sell their entire stake in the bank.
Kapoor and associated entities own 9.6 percent stake in Yes Bank. He stepped down as Yes Bank CEO in January, after RBI found compliance and governance lapses on the part of the bank. Ravneet Gill took the helm in March.
Talks of a potential Paytm-Yes Bank deal come after the private lender’s plan to raise funds from private equity firms hit an information roadblock, BloombergQuint cited three people as saying in an Aug. 27 report. The funds did not get enough comfort from publicly available information on the bank’s asset quality and profitability outlook. Instead, the investors sought more granular information, which the bank is not allowed to share based on the existing insider trading rules, the report said.
On Aug. 14, Yes Bank raised 1,930.46 crore through a qualified institutional placement to fund its business expansion. Shares in the Yes Bank QIP were issued at Rs 83.55 apiece.
On Jul. 23, Kapoor pledged part of his stake in Yes Bank as a security cover to bonds issued by Morgan Credits Pvt. Ltd.—a promoter entity. A pledge was created against Kapoor’s 4.31 percent and Morgan Credits’ 3.03 percent stake, or 7.02 crore shares, held in the bank, according to an exchange filing. Total promoter pledged holding now stands at 18.7 crore shares, or 8.1 percent of the total equity, according to BSE data.
Since then, Yes Bank has faced multiple downgrades, including from India Ratings, Moody’s Investor Services Inc. and ICRA Ltd. even as the stock went into a tailspin.
Yes Bank returned to profitability in the June quarter of 2019-20 after an unanticipated loss in the March quarter of 2018-19. Profits, however, fell short of street expectations.
Net profit of the lender fell to Rs 114 crore from Rs 1,260 crore a year ago, according to its exchange filing. Net interest income, or core income, rose 2.8 percent to Rs 2,281 crore, also lower than the Rs 2,477-crore estimate.
On Monday, Yes Bank shares rose 4.47 percent on the BSE while the benchmark Sensex gained 0.44 percent to end the day at 37,145.45 points. Markets were closed on Tuesday on account of Muharram.