Morgan Credits Pvt. Ltd (MCPL), owned by Yes Bank Ltd co-founder Rana Kapoor’s family, on Thursday said it has sold a 2.3% stake in the bank to an undisclosed buyer.
Kapoor and his two family-owned entities, MCPL and Yes Capital (India) Pvt. Ltd, own a total of 9.65% promoter stake in Yes Bank, with MCPL holding 2.76% as on 15 August. The other co-founder, Madhu Kapur, and her family-owned firm Mags Finvest Pvt. Ltd, own a 8.33% promoter stake in the bank.
“With the sole intention of reducing debt of the promoter holding company, MCPL, owned by my three daughters, it was decided to bring down our family ownership in Yes Bank to 7.4%," Rana Kapoor said, according to a MCPL statement.
MCPL did not disclose the value of the deal. Both MCPL and Yes Capital are owned by Kapoor’s daughters.
Proceeds of the transaction would be used to make a total prepayment, including interest, of ₹722 crore of the outstanding non-convertible debentures (NCDs) of MCPL subscribed by Reliance Nippon Life Asset Management Company (RNAM).
MCPL sold zero coupon NCDs worth ₹1,160 crore to RNAM. MCPL said it had utilized the funds for incubation of new-age startup businesses. “We have concluded the stake sale solely to deleverage MCPL. Through prepayment of NCDs to RNAM, we have significantly reduced our borrowing in MCPL in an accelerated manner," said Radha K. Khanna, director, MCPL. The NCDs are maturing in April 2021.
Post the sale, the total promoter holding in Yes Bank will fall from 18% to 15.7% in further compliance with the Reserve Bank of India’s regulatory level of 15%.
On 10 September, Mint reported that Yes Bank’s shareholding may witness a major churn by the year-end as Kapoor has initiated talks to sell a part of his holding to One97 Communications Ltd, the parent of Paytm and Paytm Payments Bank.
The promoters are willing to trim their stakes through divestments and also amend the articles of association, letting new shareholders earn a board seat, according to the report.
On 24 July, Mint reported that Kapoor and MCPL were forced to pledge their entire 7.34% stake with RNAM, asset manager of Reliance Mutual Fund.
As the bank’s stock value has eroded by 87% over the past year, the unsecured loan availed by MCPL from RNAM was converted into a secured loan by creating a pledge on the entire 170.25 million shares held by Kapoor and MCPL.
A prepayment of ₹200 crore was made by MCPL to Reliance MF in November last year. The loan pact mandates that the value of Yes Bank shares held by Kapoor and MCPL should always be greater than double the loan outstanding.