MUMBAI: Capping a year-long effort, State Bank of India and other lenders have inked a deal with the Japanese financial powerhouse Sumitomo Mitsui Banking Corp (SMBC) for a 20% stake sale in Yes Bank through a secondary stake purchase of 13.19% from SBI and 6.81% combined from other equity partnering banks for a total consideration of Rs 13,483 crore.
SBI, which owns 23.97% in the sixth largest private sector bank, will sell a 13.19% stake for Rs 8,889 crore, while the other banks -- Axis Bank, Bandhan Bank, Federal Bank, HDFC Bank, ICICI Bank, IDFC First Bank and Kotak Mahindra Bank -- together will sell a 6.81% stake for Rs 4,594 crore, Yes Bank said in an exchange filing on Friday.
With a sale price of Rs 21.5 per share, SBI will earning 115% on its investment and so will other lenders including HDFC Bank (2.75% stake, down from 10% originally), ICICI Bank (2.39%, down from 10% originally), Kotak Mahindra Bank (1.21%) and Axis Bank (1.01%).
That apart, LIC owns 3.98%, private equity firms Advent International 9.20% and Carlyle 6.82%. Significantly, the two private equity investors -- Advent International and Carlyle -- are not participating in the deal.
In the RBI-managed rescue deal in March 2020, SBI had picked up 49% in the bank for Rs 10 a share, and had pared its stake to 30% in the follow-on-offer in in July 2020 and further to 23.97% when Advent and Carlyle entered the bank in March 2023.
In anticipation of the development, despite a bleeding market, Yes Bank shares closed 10% higher at Rs 20.05, their highest level since February 5. Since the bailout, the stock had peaked Rs 27.41 in July 2024.
Sumitomo Mitsui Banking Corporation, a part of the Sumitomo Mitsui Financial Group (SMFG), is the second largest bank in Japan with $1.72 trillion in total assets held across its operations in 39 countries, almost half of them in the Asia-Pacific region.
"This transaction is the largest cross-border investment in the domestic banking sector. It is subject to the necessary regulatory and statutory approvals, including from the Reserve Bank and the Competition Commission, and will be subject to customary closing conditions," Yes Bank said.
The transaction is a significant milestone to drive Yes Bank’s next phase of growth, profitability and value creation and is expected to leverage SMBC’s global expertise in this phase, the lender added.
“We are excited to welcome SMBC, a globally renowned financial partner, as a major shareholder whose investment marks a pivotal step in our next phase of growth. We expect to benefit from their global expertise and high governance standards. This investment is a powerful endorsement of our transformation journey and future potential. Over the past few years, our growth has been shaped by the strong partnership and unwavering support of the SBI and they will continue to remain a valued stakeholder,” Prashant Kumar, the RBI-appointed managing director and chief executive of Yes Bank, was quoted as saying in the regulatory filing.
Toru Nakashima, the president and group chief executive of SMFG and Akihiro Fukutome, president & chief executive of SMBC, said, “India represents a key market for us, and we see immense long-term potential in its dynamic and fast-growing economy. We are proud to invest in Yes Bank, a leading bank with visionary leadership and a demonstrated track record of improving profitability. This investment aligns with our commitment to building lasting, value driven relationships in the region. We look forward to working closely with the team as a major shareholder in their next phase of growth.”
Restrictions on ownership voting rights, stricter capital requirements, and state domination of the banking sector have been keeping foreign banks away from the country. The takeover of the troubled Lakshmi Vilas Bank by the Singapore-based DBS Group in 2020 was the last major deal in the sector.