Yes Bank jumps 9% as Japan's SMBC buys 20% stake
What's the story
Yes Bank's shares jumped as much as 8.7% in early trading on Monday, hitting a high of ₹21.74 on the Bombay Stock Exchange (BSE).
The surge was propelled by the news that Sumitomo Mitsui Banking Corporation (SMBC), one of Japan's largest financial institutions, has signed a definitive agreement to acquire a 20% equity stake in Yes Bank for ₹13,483 crore.
Valuation details
Deal values Yes Bank at ₹67,411 crore
The deal with SMBC values Yes Bank at a whopping ₹67,411 crore.
The price per share for the transaction has been fixed at ₹21.5, bringing SMBC closer to possibly securing majority ownership of the bank.
Under this deal, State Bank of India (SBI) has agreed to sell 13.19% of its existing 24% stake in Yes Bank for ₹8,889 crore.
SMBC will also get the right to appoint two directors to Yes Bank's board.
Additional divestments
Private banks to divest 6.81% of their holdings
Along with SBI's stake sale, seven private banks will divest 6.81% of their holdings for ₹4,594 crore as part of the deal with SMBC.
These banks are: HDFC Bank, ICICI Bank, Kotak Mahindra Bank, Axis Bank, IDFC First Bank, Federal Bank, and Bandhan Bank,
Private equity investors Advent International and Carlyle have opted against selling their stakes at this time.
Expansion plans
Executives highlight India's strategic importance
Notably, SMBC executives have stressed India's strategic importance to their global expansion plans, with the country's rapidly growing economy being a core driver.
This acquisition is a major step for SMBC in its bid to expand its footprint in India and further bolster its position in the global banking sector.
The move is also likely to positively impact Yes Bank's future growth prospects.