SMBC to Raise Yes Bank Stake to 24.2% via ₹2,850 Crore Deal with Carlyle

Japan’s Sumitomo Mitsui Banking Corporation (SMBC) on Wednesday announced that it will acquire a 4.2% stake in Yes Bank from US private equity firm Carlyle Group for ₹2,850 crore. With this transaction, the Japanese lender’s holding in the Indian private bank will rise to 24.2%.

“In addition, SMBC has signed a definitive agreement with CA Basque Investments, an affiliate of The Carlyle Group Inc., to acquire an additional 4.2% equity stake in Yes Bank. The per-share purchase price of this acquisition is the same as that of the initial one, with a total consideration of approximately ₹28.5 billion,” the bank said in a statement.

On July 29, 2022, Carlyle announced it would acquire up to a 10% stake as part of a $1.1 billion capital raise by Yes Bank. However, later reports indicated that it sold part of its holding in the open market in 2023, thereby reducing its stake. Now it seem to be completely exiting that investment.

SMBC said that the additional acquisition will be completed “promptly.” The announcement came alongside news that SMBC has also agreed to acquire a 20% stake in Yes Bank from a consortium of Indian banks, including State Bank of India (SBI).

Following the transaction, two SMBC-nominated non-executive directors will join Yes Bank’s Board of Directors. The lender will also become an equity affiliate of SMBC Group.

“Through these investments, SMBC Group will further strengthen its presence in India and contribute to the sustainable, long-term growth of Yes Bank,” the statement added.

Just days earlier, in what it termed a “rebalancing of its strategic investment portfolio,” SMBC sold its entire 1.65% stake in another Indian private lender, Kotak Mahindra Bank.

It was earlier reported, citing sources, that SMBC is negotiating with Yes Bank to inject around ₹16,000 crore, split between ₹8,500 crore in debt and ₹7,500 crore in equity. Yes Bank shareholders have already approved the proposal.

Currently, SMBC has regulatory approval to increase its stake in Yes Bank to as much as 24.99%.

Meanwhile, SBI will retain a 10% stake in Yes Bank after divesting around 13.18% for ₹9,000 crore. Other Indian banks with holdings in the lender include HDFC Bank, ICICI Bank, Kotak Mahindra Bank, Axis Bank, IDFC First Bank, Federal Bank and Bandhan Bank.