Shares of private sector lender Yes Bank surged on Wednesday morning after reports that founder Rana Kapoor is in talks with Vijay Shekhar Sharma-led Paytm to sell stake. Yes Bank shares gained more than 8.5% to hit the day's high at Rs 68.50 on BSE. Rana Kapoor has approached Paytm's boss Vijay Sharma to sell his family members’ and his own stake in Yes Bank for Rs 1,800-2,000 crore, CNBC TV-18 reported citing sources as saying. The companies are still negotiating on the price and other issues, the news channel added. Interestingly, Yes Bank CEO Ravneet Gill told news agency Reuters that the firm is close to securing a deal to sell a minority stake to a global technology company to help boost the private lender’s capital.
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“We are in fairly advanced level of talks right now and it is close to being a done deal,” Ravneet Gill, chief executive and managing director of the corporate and retail bank, told Reuters in an interview. Rana Kapoor and his family along with the investment firms together control 9.64% stake in Yes Bank, as at the end of June quarter, according to the firm’s BSE filing. As per current valuations, the Rana Kapoor and family hold assets worth Rs 1,550 crore, taking yesterday's closing price into account.
The development assumes significance as if the deal between Vijay Shekhar Sharma and Rana Kapoor sees the light of the day, this will be the first time a fintech company gets a sizable stake in a commercial bank. The rally in the shares comes as a breather to the Yes Bank shares, which are down more than 75% from 52-week high of Rs 328.95 on BSE. Last week, Yes Bank shares plunged after global firm Morgan Stanley slashed share price target on the stock.
Morgan Stanley said that the volatility in the stock price reflects asset quality concerns, lack of clarity on timing and price of further fund raising. Morgan Stanley has a stock price target of Rs 55 on the shares. Previously, the firm had a share price target of Rs 95 on the stock. The stock has remained under pressure in recent times, especially after rating Moody’s Investors Service downgraded the lender’s long-term foreign-currency issuer rating, terming the bank’s outlook as negative.