Ex-SBI chairman Rajnish Kumar's book 'The Custodian Of Trust' details behind the-scene drama and deliberations in resolving the country's two biggest corporate failures -- Jet Airways and Yes Bank.
State Bank of India's (SBI) former chairman Rajnish Kumar was at Mukesh Ambani's party at Antilia on the day the Reserve Bank of India's (RBI) announced a moratorium on Rana Kapoor's Yes Bank. The party was organised in honour of Blackstone Group MD Stephen A Schwarzmanat's new book. The next day, Kumar made a courtesy call on Schwarzman and they both discussed the Yes Bank situation. "It was an exploratory meeting to discuss whether Blackstone could be a potential investor with the State Bank of India in the lead," disclosed the former SBI chief in his new book The Custodian of Trust, which is published by Penguin Random House India.
Kumar also disclosed that Goldman Sachs was also one of the first potential investors. "Blackstone was willing to participate in the deal and considered taking up a share of up to 20 per cent ," writes Kumar. The other potential investors with whom Kumar was in touch were global private equity investors like Brookfield, Carlyle, KKR and domestic investors like Rakesh Jhunjhunwala and Premji invest to D Mart.
"One fund which showed remarkable speed and willingness to conclude the deal was Tilden Park," mentions Kumar in his book. But due to short timelines, several conditions, and the RBI's pressure to conclude the resolution, came in the way of inducting these investors.
Sixty-three-year-old Kumar has also devoted a chapter to the 'Jet Airways conundrum,' as the restructuring and revival of Jet was extensively discussed during his three-year tenure, which ended in October 2020.
In the middle of 2019, Jet promoter Naresh Goyal, who was in urgent need of funds, reached out to SBI for sanction of additional funds. Goyal approached the lender with a proposal to pledge the shares of unlisted JP Miles, a frequent flyer programme, where Etihad Airways also owned 51.1 per cent equity. While SBI had reservations about taking an unlisted company's shares as a pledge, another proposal suggested for resolving the issue was that of financing against six Boeing 777, three Boeing 737 and three Airbus planes owned by Jet. "Since we had no experience of financing aircraft, this proposal too could not be carried further," wrote Kumar.
When the negotiations for fund raising were going on, Kumar recounted that Naresh Goyal once confided to him that Tatas were also seriously pondering getting involved and were undertaking due diligence through a team positioned in London.
As the discussion about inducting new investors progressed, Goyal insisted on keeping the permanent chairmanship for himself and board seats for both his son and his nominees. "This was not acceptable either to Etihad or to any other potential investor," noted Kumar.
Kumar has also talked about the challenging period when a dozen defaulters like Essar Steel, Jaypee, Lanco, Amtek, etc. were sent to the new Insolvency and Bankruptcy code (IBC) . In one of the quarterly earnings calls, Kumar had mentioned that the bank expects a recovery of Rs 16,000 crore from three NCLT accounts --Essar Steel, Bhushan Steel, and Alok Industries.
Kumar recalled how, every quarter, he looked up to the sky and to God, wondering when all these decisions would be made and how much money would be recovered. "Every morning I pray to God for this resolution." Kumar wrote that this comment was definitely intended to attract the attention of the courts so that they would expedite the matter.
There was a time when he got so frustrated with the delay in recovery that he announced that SBI planned to sell the Essar Steel loan at a discount to an ARC. "Fortunately, this announcement had the desired impact and things started moving. It was a bold gambit that paid off," he wrote.
On the night of the demonetisation announcement, Kumar, who was the managing director of the country's largest bank, was having dinner at the residence of Anil Khandelwal, former chairman of the Bank of Baroda. "The SBI Chairperson, Arundhati Bhattacharya, called me frantically, asking me to meet her at her residence immediately. I reached her home at around 10.30 pm and our anticipatory action started immediately," Kumar wrote in the book.
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