Sebi removes Rana Kapoor as Yes Bank promoter
2 min read . Updated: 10 Jun 2020, 10:37 PM IST
Premium- The markets regulator reclassifies Rana Kapoor as an ordinary public shareholder
- Move comes after bank’s management requested Kapoor’s removal ahead of the FPO
The Securities and Exchange Board of India (Sebi), has removed Yes Bank founder Rana Kapoor as the promoter of the company and reclassified him as an ordinary public shareholder.
The bank informed the stock exchanges on Wednesday about Sebi’s decision following a request from the current management, who asked for Kapoor’s removal ahead of the follow-on public offer being planned in the second quarter, according to two people aware of the development.
Sebi rules require the promoter to give certain commitments and disclosures to the merchant bankers before a bank can proceed with fund-raising activity, said one of the persons mentioned above, requesting anonymity. The bank decided to approach the regulator, in view of Kapoor’s strained relationship with the bank’s management and his inability to submit any disclosures as he is under police custody, the person said.
Two weeks ago, Yes Bank had received consent from the family of the other co-founder, Ashok Kapur, to reclassify him as a non-promoter shareholder of the bank. The shareholding of both the founders put together now stands reduced to 1.42%. Kapoor and his family-run firms, Yes Capital (India) Pvt. Ltd and Morgan Credits Pvt. Ltd, had sold their entire stakes last year, after the bank’s stock came under severe pressure over the uncertainty around its fund-raising plans.
In March, the State Bank of India (SBI)-led consortium, comprising six other lenders, had bailed out Yes Bank through a ₹10,000 crore capital infusion at the government’s behest, which resulted in a majority stake going under SBI (48.21%) and other financial institutions. The rescue plan led to the appointment of a new board of directors, while certain portions of the Articles of Association (AoA) of the bank, which conferred management participative rights on the promoters, were deleted. The bailout package was aimed at keeping Yes Bank afloat after the private lender failed to raise enough equity capital to remain compliant with the Reserve Bank of India’s (RBI’s) capital adequacy norms.
After several failed attempts, Yes Bank now plans to hit the market with a ₹10,000-crore follow-on public offer (FPO) under the new management. The bank has approached Sebi to allow it to execute the FPO under the so-called fast-track route, which will help it tap into the market immediately, according to a 8 June Mint report.
On Tuesday, the Kapur family also informed the bank of its decision to withdraw its petition, filed in 2013, from the Bombay high court.
The families of Yes Bank founders—Ashok Kapur, who died in the November 2008 terrorist attack on Mumbai, and Kapoor—were locked in a dispute over the nomination of people to the bank’s board. Besides seeking equal participation on the board, Kapur’s family was also seeking a restraint order on Kapoor, and the bank, for making any application to the RBI for reclassifying their family shareholding into the non-promoter category.
