Line-up of little-known Yes Bank suitors raises questions
MUMBAI: Yes Bank Ltd’s proactive disclosure of potential investors attracted scrutiny on Monday, with analysts questioning the quality of suitors who have promised a total of $2 billion.
The troubled private lender on Friday listed the likely investors, including a group of offshore family offices offering $1.7 billion and six other investors offering a total of $300 million.
Analysts at financial services firm Macquarie led by Suresh Ganapathy wrote in a note on Monday that for nearly 85% of the proposed commitments, quality is a big concern. Ganapathy is the head of financial services research at Macquarie. Yes Bank shares fell as much as 7.61% on BSE on Monday before closing at ₹64.05, down 6.22% from their previous close. The benchmark Sensex index closed almost unchanged.
The largest investor listed by Yes Bank is Erwin Singh Braich/ SPGP Holdings offering $1.2 billion, followed by $500 million from Citax Holdings & Citax Investment Group.
“To be honest, we hadn’t even heard of SPGP Holdings/erwin Singh Braich and Citax Investments. These companies don’t even have an official website, nor does the billionaire Erwin Singh Braich have a Wikipedia link to describe him,” said Macquarie. The brokerage said it doubts Reserve Bank of India “would approve such investors who don’t pass muster” with the central bank’s “fit and proper” criteria.
Macquarie also expressed serious reservations regarding the quality of Yes Bank directors willing to consider such investors as large shareholders.
While there is not much information available in the public domain regarding Braich’s investments, he is referred to as Canada’s first Sikh billionaire. Braich, 63, is the founder of The Braich Group of Companies and Trusts that underwent bankruptcy proceedings in 1999.
According to the site erwinsinghbraich.com, Braich took over the family business at the age of 20 when his father passed away on his 65th birthday on May 21, 1976. After a few years, he turned to business activities worldwide, focusing mainly on Eastern Europe.
Jefferies analysts Nilanjan
Karfa and Harshit Toshniwal said in a report on Monday that at current dilution, both family offices will attract the RBI’S ‘fit and proper’ criteria as they will own more than 5% in a private sector bank. “And that’s being seen as a big hurdle,” they said.
Alongside Braich is Hong Kong-based SPGP Holdings, that had bid for bankrupt Indian garments company Reid & Taylor earlier this year but was unable to make the earnest money deposit of ₹2 crore. Documents sourced from Hong Kong’s companies registry showed that SPGP Holdings has a total paid-up capital of HK$10,000, or ₹91,470, and has one director—somitra Agrawal, a resident of Malad (west), Mumbai. According to spgrowthpartners.com, Silver Dale Services (India) Pvt. Ltd is SPGP’S business associate and has total assets of ₹1.7 crore as on March 31, 2019.