Japan’s MUFG Bank is close to hammering out an agreement to buy a stake in India’s Yes Bank, in a deal that would value the private lender in the region of $6.5-7 billion, sources with knowledge of developments said.
According to the sources, the contours of the deal are being worked out between the Japanese bank, State Bank of India that has the largest stake at 23.98 per cent, and potentially with the other Indian financial institutions who have smaller stakes.
In the initial instance, MUFG is expected to buy SBI’s stake and will take a majority stake eventually, sources said. One of the sources said the Yes Bank stake sale will be one of the deals in the financial services sector to watch out for this year.
MUFG did not respond to an email sent by businessline seeking a response to the proposed transaction.
A spokesperson for SBI said, “As a policy, bank does not comment upon such matters.”
Around a month ago, responding to a similar query from businessline on the transaction, SBI had replied, “We categorically deny any developments in this matter.”
In a recent interaction with businessline, Yes Bank MD & CEO Prashant Kumar, when asked whether there was any progress on SBI’s stake sale in the bank, said, “No, at least I am not aware. Definitely this is not something which is within our purview. SBI’s stake sale is between the bank and any interested party.”
The Yes Bank transaction has been in the works for a while with several other banks that had previously evinced interest in the past having dropped out as under Indian banking regulations, promoters’ voting rights in private banks are capped at 26 per cent. This was seen as a major deterrent for a potential acquirer.
Expansion plan
MUFG is keen to expand its presence in India and has been looking at acquisitions for growth. With five locations across the country, it has the largest network amongst Japanese banks in India.
In 2020, SBI had invested ₹6,050 crore to acquire 49 per cent stake in Yes Bank, as part of a rescue plan for the troubled lender. Its shareholding fell to 26.14 per cent after private equity firms Carlyle and Advent invested in the bank last year.
Under the Yes Bank resolution plan in 2020, then HDFC Ltd and ICICI Bank invested ₹1,000 crore each, Axis Bank invested ₹600 crore, Kotak Mahindra Bank ₹500 crore, Bandhan Bank & Federal Bank ₹300 crore each, and IDFC First Bank ₹250 crore in the bank.
As on December 2024, HDFC Bank, ICICI Bank, Kotak Mahindra Bank, Axis Bank held 1-3 per cent stake, while LIC held a 4 per cent stake in YES Bank.