App-based money transfer and e-commerce startup Paytm is eyeing a vital toehold in core banking by seeking to acquire a stake in Yes Bank from its co-founder Rana Kapoor. Kapoor is in talks with Paytm founder Vijay Shekhar Sharma to sell his and his family's stake worth up to Rs 2,000 crore, a media report says. Kapoor and his family hold 9.64 per cent in Yes Bank, of which 69 per cent is pledged with Reliance Nippon Life Asset Management.
In August, Kapoor sought out Sharma, the founder and CEO of the Noida-based Paytm backed by Japan's Softbank, and offered to sell his stake in Yes Bank, as well as that of his family members, for Rs 1,800-2,000 crore, a report on the MoneyControl website said quoting unidentified sources. "Negotiations on the price and the other issues are on," the source said.
Kapoor, 62, his family members, and the investment firms they control own a 9.64 per cent stake in Yes Bank. On Wednesday, Yes Bank gained 14 per cent to trade at Rs 72 by noon on the National Stock Exchange (NSE). The benchmark Nifty was up 0.45 per cent trading at 11,052 points and Bank Nifty, of which Yes Bank is a constituent, September future was up 0.98 per cent trading at 27,822 points.
At current valuations, the shares Kapoor controls is worth Rs 1,550 crore, according to some estimates. If the deal goes through, it would mark the end of the banking career of one of India's most-storied bankers and the potential rise of a serial entrepreneur in the banking sector, the report says. In 2015, Kapoor lost a court battle to co-promoter Madhu Kapur over a board appointment. To cap his misfortune, he was eventually ousted as the CEO and managing director of Yes Bank by the Reserve Bank of India (RBI), which cited "serious lapses" in governance and "poor compliance culture."
Sharma, 41, who founded mobile content company One97 Communications that owns Paytm in 2000, has been on a fundraising spree. One97 has taken in $2.3 billion from investors including Softbank, Alibaba and Warren Buffett's Berkshire Hathaway. Valued at an estimated $15 billion, his firm operates an e-commerce marketplace as well as Paytm Payments Bank. Kapoor's family owns a stake in Yes Bank directly and through investment firms Yes Capital and Morgan Credits, according to reports.
Kapoor earlier pledged his entire stake as also that of Morgan Credits to Reliance Nippon Life Asset Management, an Anil Ambani Group-promoted company, for Rs 1,500 crore. He has reportedly repaid only 30 per cent of the amount. "He has taken consent from Reliance to sell the shares, pay back the money owed to Reliance Nippon, and keep whatever he makes on top of it," the report quotes another unidentified source as saying.