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Yes Bank’s founder Rana Kapoor to sell his stakes to Vijay Shekhar for INR 20 billion

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Rana Kapoor, Founder, Yes Bank

Rana Kapoor, the founder of Indian private lender Yes Bank, is in early talks with mobile payments company Paytm for a stake sale worth up to INR 20 billion. Rana Kapoor and his family members along with their investment firms—Morgan Credit Pvt Ltd, Mags Finvest and Yes Capital Pvt Ltd, hold a little less than 10 percent stake in the Mumbai-headquartered bank, as the shareholding pattern.

According to media reports, Kapoor had, in August this year, reached out to Paytm’s founder Vijay Shekhar Sharma, with an offer to sell his stake in Yes Bank. If the deal goes through Sharma, whose company One97 Communications(parent company of Paytm), will be a shareholder of the country’s fourth-largest private bank and also witness the complete exit of Kapoor, who started Yes Bank in 2004 along with his brother in law Ashok Kapur, from the banking industry, a  development that was first reported by news portal Moneycontrol.com.

However, as per Indian banking regulations, the acquiring entity must seek approval from the Reserve Bank of India (RBI) if the stake sale is over 5 percent and above.  Yes Bank and Paytm’s Vijay Shekhar Sharma did not respond to IBS Intelligence’s queries in this regard.

Sources told IBS Intelligence that Rana Kapoor wants to focus on the higher education sector with ISME, a management and entrepreneurship school, started by him and his daughter Radha Kapoor. Kapoor has been shifting focus from Yes Bank since the last few years after he was ousted as the CEO and MD of the bank last year by the Reserve Bank of India (RBI) over “serious governance”  issues. Since then, Kapoor has been in talks with several investors to sell his stakes but nothing has fructified yet.  The talks of stake sale also speak volumes about Kapoor’s dire need for capital because he took on to Twitter in September last year stating that he would never sell his shares at Yes Bank. “Diamonds are forever: My Promoter shares of @yesbank are valuable to me,” he pledged.

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Vijay Shekhar Sharma, Founder Paytm

Meanwhile, for Sharma, whose company has multi-billion dollar backing from marquee investors such as Jack Ma, Masayoshi Son, and Warren Buffet, the deal will help him in fulfilling his dream to convert Paytm as a full-fledged financial services company, which is currently valued at an estimated $15 billion. Sharma has a banking license for Paytm Payments Bank, which has been incurring losses since inception.

On September 9, Yes Bank’s shares closed at 4.5 percent higher at Rs 63.10 on the NSE.

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