Reliance Nippon AMC invokes pledge to sell 10 cr shares of Yes Bank for Rs 352.9 cr

The shares, part of Rs 950-cr issuance of NCDs by Morgan Credit Private Limited, were pledged by Rana Kapoor as security

Kumar Shankar Roy Oct 3, 2019

Yes Bank websiteRana Kapoor’s once vice-like grip over Yes Bank is now reduced to a loose shoelace knot. Reliance Nippon Asset Management (RNAM) invoked pledge and sold 10 crore shares of the private sector lender for Rs 352.9 crore on Tuesday, October 1. The shares, part of Rs 950-crore issuance of NCDs by Yes Bank promoter company Morgan Credit Private Limited (MCPL), were pledged by Rana Kapoor as security. This means Rana Kapoor family stake has now fallen to as low as 1.6% in a bank the maverick entrepreneur and his older brother (late) Ashok Kapur built from scratch in 2004.

Such a large quantity of shares sold on October 1, pushed Yes Bank stock price to multi-year low levels and ended the day down nearly 23%. The stock has fallen 84% in the last 12 months, greatly underperforming BSE Bankex that has risen 14.5% at the same time. Rana Kapoor’s term as MD and CEO of Yes Bank came to an end on January 31 after the RBI did not agree to a proposal for a longer tenure.

“We, Milestone Trusteeship Services Limited in the capacity as Debenture Trustee under a transaction of Rs 950 Cr issuance of NCDs by Morgan Credit Private Limited, have invoked and sold the shares of YES BANK which were pledged by Mr. Rana Kapoor as security for the said NCDs Issuance,” Milestone Trusteeship Services said in a notification to exchanges. These NCDs are zero-coupon bonds set for maturity on April 19, 2021. The sharp correction in the Yes Bank stock has hit the equity cover on these exposures.

In a separate exchange filing, Yes Bank, now under the leadership of CEO Ravneet Gill, said the material drop on October 1, 2019 was primarily on account of the forced sale. “…triggered by an invocation of pledge on the equity shares of a large stakeholder. It may be noted that with this sale, the entire pledge stands extinguished and all sale under the same duly completed,” the bank said.

On Wednesday, the shares have bounced back over 25% to Rs 40 levels in the early trades following Yes Bank’s clarification that the stock fell on Tuesday owing to the share sale by the lenders. On October 2, Rana Kapoor’s promoter group companies — Yes Capital and MCPL – said that these pledged shares were sold by RNAM.

“These were shares pledged by our father Rana Kapoor to support the borrowings of MCPL, a company owned by his three daughters…we are highly dejected that our family shareholding in YES Bank was sold at such dismal prices levels,” said a statement by Yes Capital and MCPL.

“It is important to clarify that the sale of shares by us or RNAM in no way reflects our views on YES Bank — the fundamentally extraordinary financial institution…,” the statement said.

Meanwhile, the Ashok Kapur family has affirmed full support to Yes Bank, following co-promoter Rana Kapoor’s near-complete exit from the bank. Co-founder Ashok Kapur was killed in the 26/11 terrorist attacks in Mumbai. The Ashok Kapur family’s ownership is over 8% and a miniscule of it is pledged, PTI reported.

Over the last few days, Rana Kapoor family’s Yes Capital and MCPL have been selling shares in bits to repay debt owned to Reliance Nippon Asset Management and Franklin Templeton Asset Management. As on June 30, 2019, Kapoor and his two promoter companies held 10.6% stake in Yes Bank. This stake is down to a trickle now.

Disclaimer: Views expressed here in this article are for general information and reading purpose only. They do not constitute any guidelines or recommendations on any course of action to be followed by the reader. The views are not meant to serve as a professional guide/investment advice / intended to be an offer or solicitation for the purchase or sale of any mutual fund or stock.

Kumar Shankar Roy

Kumar Shankar Roy is contributing editor with RupeeIQ. Kumar is a financial journalist, with a functional experience of 15 years. He tracks mutual funds, insurance, pension, PMS, fixed income/debt and alternative investments markets closely. He has worked for The Times of India, The Hindu Business Line, Deccan Chronicle Group, DNA, and Value Research, among others, across different cities in India. He is deeply interested in marrying data insights with actionable opinion. He can be contacted at

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