Jhunjhunwala likely to withdraw from YES Bank's preferential share offer
Lender’s board may also reject the $1.2-b offer by Erwin Singh Braich, SPGP Holdings
by PALAK SHAH/SURABHIFresh concerns seem to be emerging about private sector lender YES Bank’s capital-raising plans as billionaire investor Rakesh Jhunjhunwala is likely to withdraw plans to invest $25 million in the lender through his wife Rekha Jhunjhunwala’s family office. He is expected to issue a formal letter to this effect on Tuesday when the board of directors of YES Bank meets to discuss the capital-raising plans.
“The logic behind not subscribing to YES Bank’s preferential allotment by Jhunjhunwala is that it is higher than the prevailing market price. There is also a lock-in period of one year.
Instead, Jhunjhunwala can easily buy YES Bank shares in the open market, lower than the preferential issue price, and it will also not have any lock-in period,” said sources close to the development.
The preferential offer that YES Bank had recently announced is priced at around ₹78. YES Bank shares closed at around ₹56 on Monday on the BSE.
An email sent to Jhunjhunjwala’s Rare Enterprises by BusinessLine remained unanswered. Significantly, on November 4, Rakesh Jhunjhunwala had purchased 1.29 crore shares, amounting to a 0.51 per cent stake in YES Bank. The transaction through a bulk deal was at a price of ₹67.10 apiece, taking the total value of the deal to about ₹87 crore.
Meanwhile, sources also indicated that YES Bank’s board is likely to reject the $1.2-billion offer by Canadian billionaire Erwin Singh Braich and SPGP Holdings.
“This is purely speculative and YES Bank does not, as a matter of policy, comment on market speculation,” said a YES Bank spokesperson in response to an e-mail by BusinessLine on the two issues.
The board of Yes Bank had, on November 29, approved plans to raise $2-billion capital through preferential allotment of shares.
Apart from Braich and Jhunjhunwala, investors, including include Citax Holdings Ltd and Citax Investment Group, are keen to invest $500 million. The bank had also said that a top-tier US fund house is willing to invest $120 million.
Other interested investors include GMR Group and Associates, which are keen to invest $50 million; Aditya Birla Family Office and Rekha Jhunjhunwala are also keen to pledge $25 million each.
Foreign institutional investors Discovery Capital and Ward Ferry are willing to invest $50 million and $30 million.
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