Winning Bizness Desk
Mumbai.Japan’s Sumitomo Mitsui Banking Corporation (SMBC) is in talks to acquire a major stake in India’s private sector lender, Yes Bank. The negotiations are underway with the State Bank of India (SBI), which currently holds a 23.97% stake in Yes Bank. As per initial discussions, SBI may sell up to 20% of its stake to SMBC. The Japanese banking giant may also purchase an additional 6-7% stake from other shareholders, taking its total holding to 51%, which would trigger an open offer process.
Biggest Acquisition in Indian Banking Sector Possible
If the deal goes through, it would be one of the largest acquisitions in India’s banking sector. The open offer would be a formal process, following regulatory norms, to allow SMBC to gain controlling interest. This move signals a significant shift in ownership of Yes Bank, which had undergone a major rescue operation in 2020 involving SBI and other Indian banks. SMBC is reportedly keen to manage the bank's operations by nominating directors to Yes Bank’s board while agreeing to India’s 26% voting rights cap.
Other Investors Likely to Exit
Apart from SBI, other investors such as Axis Bank, ICICI Bank, HDFC Bank, and Kotak Mahindra Bank — together holding 7.36% in Yes Bank — are also likely to divest their stakes. Private equity firms Advent International and Carlyle Group, which own 9.2% and 6.84% respectively, may also sell their holdings during the open offer. LIC, the state-owned insurance giant, has a 3.98% stake in Yes Bank and may play a key role in the transaction.
Yes Bank Shares Surge on Deal Buzz
The market responded positively to news of the potential deal. Yes Bank shares jumped 10% during intraday trading on Tuesday, reaching a high of Rs 19.44. The stock eventually closed 1.41% higher at Rs 18. Over the past month, Yes Bank has delivered a return of 7%, indicating improving investor sentiment amid the acquisition buzz.
Previous Attempt Failed in 2023
This is not SMBC’s first attempt to acquire a controlling stake in Yes Bank. In 2023, the Japanese bank had shown interest but the deal fell through due to India’s regulatory limit of 26% on voting rights. This time, SMBC is willing to comply with the cap but seeks operational control through board nominations. Yes Bank, founded in 2004 by Rana Kapoor, operates more than 1,200 branches and 1,300 ATMs across 710 cities and has over 8.2 million customers. The bank is currently led by CEO and MD Prashant Kumar.
Key Points at a Glance:
1. SBI may sell 20% stake in Yes Bank to SMBC.
2. SMBC aims to acquire 51% stake through open offer.
3. Axis, ICICI, HDFC, Kotak may also exit their holdings.
4. Advent and Carlyle could sell over 16% combined stake.
5. Yes Bank shares surged 10% on acquisition news.
6. SMBC had tried acquiring Yes Bank in 2023 but failed.
7. SMBC to seek board control while respecting 26% vote cap.
