The Canadian tycoon who wants to save Yes Yes weighs Citax’s $500 mn lifeline
VANCOUVER/MUMBAI: Erwin Singh Braich, the mysterious tycoon behind a $1.2 billion bid to rescue a beleaguered Yes Bank, says he is Canada’s richest man with a story so fabulous that Netflix Inc. wants to tell it.
There’s a l ess glittering account pieced together from interviews and court records: The son of a lumber baron has a history including bankruptcy, lawsuits and soured business deals. He has no headquarters, no banker to manage his money, and is currently living in a three-star motel in the Canadian prairies.
At stake is the future of Yes Bank that’s staggering under the weight of its bad loans. Yes Bank desperately needs the cash injection to replenish its core equity capital, which is barely above the regulatory minimum of 8%. The stock has plunged 72% this year, including a 10% plunge Tuesday, reducing its market value to ₹12,900 crore.
Braich says he has the money for the investment and has provided documentation to Yes Bank’s chief executive Ravneet Gill on his ability to pay. “I’ve been under the radar,” Braich, 63, said in a phone interview last week. “We have a lot of different holdings and assets that people don’t know about.” The funds will be in escrow by the time Yes Bank shareholders meet this month to approve the fund raising, he said.
“I don’t think Mr. Gill is a stupid man,” Braich said, adding “a lot of scepticism will be erased” surrounding his bid.
Yet there are plenty of signs from Braich’s past that some skepticism may be warranted. For two decades, he has been mired in dozens of lawsuits with family members, creditors and business associates, according to Canadian and US court records.
In one case, he pitched two investors on a plan to buy scrap metal from the Democratic Republic of Congo, telling them he had a multimillion dollar commodity trading business, according to a 2008 lawsuit filed in New York. The investors, Roger and Punit Menda, sued him and four others for defrauding them of $340,000, saying Braich lied about the metal contracts and “did not possess the personal wealth he claimed to and was, in fact, without any personal assets,” according to the filing. Braich failed to respond to the complaint or appear in court, according to a default judgment ordering the money be repaid with interest.
Braich called the lawsuit “so stupid and frivolous we didn’t even bother to defend it.” He said he didn’t pay the judgment but might offer to pay the Mendas back because he feels badly they missed out on an opportunity.
Several analysts have expressed scepticism about the potential new investors in Yes Bank. The bank’s shares dropped 18% in the week after the names were announced on November 29, including Braich, SPGP and Citax Holdings. (Braich says he has no affiliation with Citax.)
“We have serious reservations regarding the quality of board of directors who are willing to consider these kinds of investors to be large shareholders,” Suresh Ganapathy, an analyst at Macquarie Capital Securities (India) Pvt., wrote in a note.
Braich grew up in Mission, British Columbia, the eldest of six children in a Sikh family originally from Punjab. His father Herman had left India at the age of 14—taking little but the name of his tiny village, Braich—and built a fortune in British Columbia’s forestry industry.
“The reason I’ve had so much litigation was because I was a trustee for my father’s estate,” said Braich. Those headaches include a 1999 involuntary bankruptcy he said was orchestrated by opponents, including his brother. The bankruptcy remains undischarged with more than C$13 million in total liabilities, according to Canadian bankruptcy records. Braich was arrested and prosecuted after refusing to provide records of his assets or appear in court, the Public Prosecution Service of Canada said in an email. Braich said he always had assets and has repaid his debts with interest. He holds all his wealth in his children’s five trusts, which he controls as sole trustee, he added.
He hasn’t owned a home since the 1990s, choosing to live and work out of hotel rooms around the world from Ritz-carltons to Kempinskis to Travelodges, he said. Right now, it’s the three-star Sandman Hotel in Grande Prairie, Alberta, which Braich said he chose for its in-house Denny’s restaurant. He’s been undergoing dental work ahead of what he says are upcoming TV appearances with Stephen Colbert and Oprah Winfrey. “A bunch of the major networks want to have me go on a talk show tour,” Braich said. Then there’s Netflix and Amazon, which want to do a fourseason series on him and his father, he said.
The Oprah Winfrey Network said none of its producers are familiar with his name. CBS Entertainment said it doesn’t comment on Colbert’s bookings. Netflix and Amazon didn’t respond to requests for comment.
MUMBAI: Yes Bank on Tuesday said it is considering a $500 million investment offer from London-based Citax Holdings and Citax Investment Group, in what would be a vital financial lifeline for the cash-starved lender.
A final decision on the investment, which is proposed to be made through a preferential allotment, will be taken at the bank’s next board meeting.
Yes Bank had said on November 29 after a board meeting that several investors had shown interest in buying its shares worth a total $2 billion through a preferential allotment. The potential investors included the family office of Canada-based Erwin Singh Braich and Hong Kong-based SPGP Holdings (as part of the $1.2 billion binding offer) as well as the $500 million offer f rom Citax Holdings, through non-binding agreements. “The board is willing to favourably consider the offer of $500 million of Citax Holdings and Citax Investment Group and the final decision regarding allotment will follow in the next board meeting, subject to requisite regulatory approval(s),” Yes Bank said.
The bank added that the binding offer of $1.2 billion submitted by Braich and SPGP Holdings remained under discussion.