YES Bank share price crashed on Sensex and Nifty today on a report that said Big Bull Rakesh Jhunjhunwala was likely to shelve a plan to invest $25 million in the private sector lender. However, YES Bank called such report "purely speculative". This comes amid uncertainty over the bank's capital raising plans. The board of the lender will meet today to finalise and approve the details of the preferential allotment of shares.
Share price of YES Bank declined up to 12.27% to Rs 49.30 against previous close of Rs 56.20 on BSE. On Nifty, the stock fell 13.68% to Rs 48.55 compared to previous close of Rs 56.25.
The stock closed 10.05% lower at Rs 50.55 on BSE. On NSE, the stock ended 10.40% lower at Rs 50.40. YES Bank was the top loser on both Sensex and Nifty today.
The mid cap stock has fallen 66.62% in last one year and saw 69.63% decline in value since the beginning of this year. YES Bank share price has lost nearly 22% since November 29 when the lender held a board meeting to announce names of potential investors in the bank.
Jhunjhunwala is expected to release a formal letter regarding his decision on investment on December 10, according to a report in BusinessLine.
"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," Business Line newspaper quoted a person in knowledge of the development as saying. The market veteran can instead buy shares at a lower price in the open market without a lock-in period, the person said.
On November 30, the lender had mentioned billionaire investor Jhunjhunwala's wife Rekha Jhunjhunwala among the potential investors who were willing to infuse funds into the cash-starved bank. The bank said Jhunjhunwala had planned to invest $25 million in the private sector lender.
On November 4, Jhunjhunwala, often referred as Warren Buffet of India, bought nearly 1.3 crore shares of YES Bank for around Rs 87 crore through open market transactions.
Jhunjhunwala bought the lender's shares at an average price of Rs 67.10, valuing the transaction at Rs 86.89 crore, bulk deal data showed. His stake (0.5%) in YES Bank forms a minuscule portion of his portfolio which stands at approximately Rs 18,000 crore.
On November 30, YES Bank in a filing to the bourses disclosed the list of potential investors willing to infuse funds into the bank. The bank mentioned entrepreneur Erwin Singh Braich/SPGP Holdings as a key investor with whom talks were ongoing and expected to be concluded shortly. Hong Kong-based SPGP Holdings/ Erwin Singh Braich committed nearly Rs 8,600 crore ($1,200 million) to the bank.
Other parties who showed willingness for fund infusion, according to the bank, were Discovery Capital ($50mn), GMR Group and Associates ($50 mn), Rekha Jhunjhunwala ($25 mn) , Aditya Birla Family Office ($25 mn) , Ward Ferry ($30 mn) and Citax Holdings Ltd and Citax Investment Group ($500 mn).
On December 2, the bank said that Capital International, part of the $1.87-trillion US-based Capital Group, has committed to invest at least $120 million in the private sector lender.
By Aseem Thapliyal