IL&FS liquidity crisis forces Rana Kapoor's family to sell 6-year-old mortgage unit

The family of veteran banker Rana Kapoor is planning to sell their six-year-old mortgage finance company, reports suggest. Kapoor's family office is looking for interested parties to sell majority stock in the mortgage unit as rising prudence in credit market is eating into growth prospects of shadow finance firms, Bloomberg reported.

The fund, named The Three Sisters: Institutional Office, was founded by Rana Kapoor's eldest daughter Radha Kapoor Khanna in 2013. The family office of the Yes Bank co-founder is in talks with Tokyo-based Nomura Holdings Inc for a potential stake sale, the report added. The family office has also reached out to several other private equity firms with the proposal, the report further added.

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Rana Kapoor co-founded Yes Bank in 2004 and took it to the position of fourth-largest private lender. He was ousted earlier this year by the Reserve Bank of India amid a controversy over bad-debt accounting. Kapoor, however, does not hold any position in the family office run by his three daughters.

The Kapoor family office could be planning to sell a majority stake in the business, the Bloomberg report said. The deliberations in the matter are at an early stage and there is no guarantee that they will turn into a transaction, it further added.

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Some time back, defaults at Infrastructure Leasing & Financial Services (IL&FS) kick-started a liquidity crisis in India's credit market. The liquidity crunch bore down heavily on shadow banking firms as it forced investors to shun their debt and rollover risks for outstanding borrowings. Meanwhile, it helped private equity firms such as Blackstone LP acquire assets. Many founders - from tycoon Anil Ambani to media mogul Subhash Chandra - are selling assets to tide over the liquidity crunch.

Earlier this year, Wadhawan Global Capital, parent of mortgage lender Dewan Housing Finance Corp., sold its stake in Aadhar Housing Finance Ltd. to Blackstone. Meanwhile, a family office that manages funds for the Jhunjhunwala family is planning to invest in finance companies which have been affected by the liquidity crisis.

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(Edited by Vivek Punj)