The 16-year long association of YES Bank co-founder late Ashok Kapur’s family with the new age private lender as promoters has come to a dramatic end.
On Saturday, Yes Bank intimated the stock exchanges that Madhu Kapur family (Madhu Ashok Kapur; Shagun Kapur Gogia; Gaurav Ashok Kapur; and Mags Finvest Private Limited) has informed the bank on 28 May consenting to reclassify their shareholding in the bank as ‘non-promoter shareholders’ or public shareholders.
It is not immediately clear why Kapurs chose this point of time to become public shareholders. As on March 31, 2020, Madhu Kapur held 1.12 per cent in YES Bank, while Mags Finvest had 0.30 per cent, according to data on the BSE.
With Kapurs’ choosing to step back as YES Bank promoters, an era is over at Mumbai-headquartered Yes Bank. Yes Bank was co-founded in 2004 by Ashok Kapur and Rana Kapoor with Ashok as chairman and Rana as Managing Director and CEO.
The other partner, Harkirat Singh withdrew from the association over differences with partners soon after YES Bank started operations. Of the two, Rana Kapoor was more aggressive and dominated the partnership throughout their period of association. In 2008, after Ashok Kapur was killed in a terrorist attack in Mumbai, Rana Kapoor ran the show all along and largely decided on business matters all alone.
A strained relation, power struggle
During the 16 years of Yes Bank’s journey from inception until its collapse, Ashok Kapur’s family has had a visibly strained relationship with Rana Kapoor. Not long after Kapur’s death, the relations between the Kapoors and Kapurs turned sour and the differences became public. It suffices to say that the trust Kapur family once had on Rana Kapoor had vanished.
Matters came to a head when Rana Kapoor refused to give a board seat to Shagun Gogia in Yes Bank, the daughter of Ashok Kapur and Madhu Kapur (sister of Rana Kapoor’s wife, Bindu Kapoor). Since 2013, Madhu Kapur, who inherited the promoter holding from husband Ashok Kapur, has been fighting a legal battle for the joint nomination right and a board seat for her daughter, Shagun.
Kapoor was reluctant to heed their request saying that Shagun didn’t have the necessary board experience. This tug of war continued for several years. Finally, in April 2019, the two promoters — the Kapurs and Kapoor — buried the hatchet and appointed Shagun on the board of Yes Bank. In March this year, Madhu Kapur sold 2.5 crores in the bank for Rs161 crore at Rs 65 apiece. Kapur couldn’t have sold more than 25 percent of her holding as the RBI’s three-year lock-in for investors kicked in.
The irony of the events is striking. Rana Kapoor once called his holding in the bank ‘diamonds forever’ only to sell it later while Ashok Kapur’s family held on until the last moment. The Kapurs sold part of their shareholding only after the ownership changed hands at the end of a dramatic rescue deal. Compared with what the shares would have fetched during the giddy periods of Yes Bank, the Kapurs were forced to sell their remaining shares at a throwaway price.
An era over
With Madhu Kapur family exiting the promoter status in YES Bank, both original co-founders, Kapoors and Kapurs are no longer part of the promoter group. Post the hurried bail-out early this year, YES Bank is now under the ownership of a clutch of banks led by State Bank of India. The bank’s aggressive corporate lending focus that led the bank to a near financial collapse is no longer there. YES Bank’s new management, under former SBI official, Prashant Kumar, is on a cautious path in every step.
The bank is gradually repairing its balance sheet and is in the process of raising capital to meet the basic reserve requirements. Rana Kapoor was arrested on 8 March, 2020 for alleged financial irregularities committed during his days in the bank. The probe is on.
Kapoors and Kapurs are now just names in YES Bank’s history reminiscent of a tumultuous past.