Published on 2/12/2019 2:24:49 PM | Source: Live Mint

Yes Bank slumps over 7% as brokerages express concern over quality of investors

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Shares of Yes Bank slumped over 7% in early trading hours as brokerages expressed concerns over the quality of potential investors in the bank announced by the private sector lender on Friday.

In intraday, the stock was down 7.6% to hit a low of ₹63.10 a share. At12.40am, the lender was trading at ₹66.55 on BSE, down 2.5% from its previous close. So far this year it was down 63.41%.

Yes bank had told exchanges on Friday that it is in discussions with the family office of Canadian businessman Erwin Singh Braich, who has expressed interest in investing up to $1.2 billion in the bank. Other investors who have shown interest include Rekha Jhunjhunwala’s, wife of while billionaire Indian investor Rakesh Jhunjhunwala, who has expressed interest to invest up to $25 million in the bank.

The bank said that another top tier US-based fund house has shown interest to invest $120 million in the bank, without disclosing name. Apart from these potential investors, the bank said it has received interest from the family office of Citax Holdings Ltd. & Citax Investment Group for an investment of $500 million in the bank.

Several brokerages are however sceptical about Erwin Singh Braich's ability to invest.

"We have big reservations regarding the quality of investors that have bid and we doubt whether RBI will give approval to such investors who want to take more than 10% stake", said Macquarie Research in a 2 December report.

"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 per se, nor does the billionaire Erwin Singh Braich have a Wikipedia link to describe him", the brokerage firm added. The brokerage has maintained underperform rating on the stock with a target price of ₹50 a share.

Investors now awaiting more clarification from the next board meeting which is scheduled on 10 December.

Brokerage firm Jefferies India have also maintained its under perform rating with target price of ₹38 a share. The brokerage also says that Of the $1.8 billion coming from family-offices, $1.7 billion is from two lesser known off-shore investors and both don't seem to have very positive reputations going by a quick internet news search.