Rakesh Jhunjhunwala effect on Yes Bank: Shares slump on news big bull may not invest $25 million

Shares of private sector lender Yes Bank slumped in trade on Tuesday afternoon, after media reports that ace investor Rakesh Jhunjhunwala may withdraw his $25 million bid. Yes Bank share price slumped by more than 5% to hit the day’s low at Rs 53.40 on BSE. Rakesh Jhunjhunwala may withdraw his $25 million bid in Yes Bank after uncertainty over the bank’s capital raising plans, BusinessLine reported citing sources. YES Bank’s Board of Directors are all set to meet later in the day to finalise and approve the details of the preferential allotment and convene an extraordinary general meeting subsequently, to obtain the approval of the shareholders for raising capital.

Notably, Rakesh Jhunjhunwala had planned to invest $25 million in Yes Bank through his wife Rekha Jhunjhunwala’s family office. The development assumes significance especially after media reports that Yes Bank is likely to reject $1.2 billion bid by Canadian investor Ervin Singh Braich.  India’s fourth-largest private lender Yes Bank is likely to reject the offer from Braich and SPGP, opting instead for institutional investors, Bloomberg reported citing a source aware of the development.

Yes Bank had earlier announced plans to raise up to $2 billion. Erwin Singh Braich had expressed interest to invest up to $1.2 billion in the bank. Further, ace investor Rakesh Jhunjhunwala’s wife Rekha Jhunjhunwala’s has also expressed interest to invest up to $25 million in the bank. Family office of Citax Holdings Ltd & Citax Investment Group are also looking to put in $500 million in the bank. Aditya Birla Family Office and GMR Group and Associates have also expressed their interest to invest $50 million each.  A Top Tier US Fund House– Capital International has also shown interest to invest around $120 million in the lender. Discovery Capital ($ 50 million), and Ward Ferry ($30 million) were also among interested investors.

However, global brokerages have raised concerns over the quality of its new investors. “We have big reservations regarding the quality of investors that have bid and we doubt whether RBI will give approval to such investors who want to take more than 10% stake”, global brokerage firm Macquarie said in a report on December 3.

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