Kotak Mahindra Bank saw ₹6,256 crore worth of block trades.
Reports suggest Sumitomo Mitsui exited its 1.65% stake to redeploy funds into Yes Bank.
The Japanese lender is investing ₹14,000 crore for a 20% Yes Bank stake.
Kotak Mahindra Bank shares worth more than ₹6,250 crore were sold in large block trades during morning deals on September 10, with Japan’s Sumitomo Mitsui Financial Group being the likely seller. Around 3.22 crore shares, equivalent to 1.62% of the bank’s equity, were traded across 31 blocks at ₹1,941 per share.
While the identities of buyers and sellers were not immediately confirmed, reports had earlier pointed towards Japan’s Sumitomo Mitsui Financial Group (SMFG) planning to offload its entire 1.65% holding in Kotak. The reported exit, as suggested by the reports, is part of Sumitomo’s strategy to free up capital for its much bigger bet on Yes Bank.
Shares of Kotak Mahindra had a knee-jerk reaction to the block deals, edging up by about 1% in initial minutes of trade before turning flat.
In May, Yes Bank announced that SMFG would invest nearly ₹14,000 crore to acquire a 20% stake, the largest cross-border deal in India’s financial services sector to date. The transaction involves buying a 13.19% shareholding from State Bank of India and a further 6.81% from a consortium of lenders including Axis Bank, HDFC Bank, ICICI Bank and Kotak Mahindra Bank itself.
Regulatory clearances have paved the way for the Japanese lender. The Reserve Bank of India last month approved SMFG’s plan to raise its holding in Yes Bank to as much as 24.99%, clarifying that the group would not be classified as a ‘promoter,’ which would have triggered stricter compliance requirements. Earlier this month, the Competition Commission of India also gave its nod, clearing the final hurdle.
For Kotak Mahindra Bank, the block deal is unlikely to change much in the near term. The Mumbai-based private lender has had a muted start to the financial year, reporting a 7% year-on-year drop in standalone net profit to ₹3,282 crore for the June quarter, even as net interest income rose 6% to ₹7,259 crore.
For Yes Bank, however, the Japanese group’s investment marks a watershed moment, a major infusion of capital and a vote of confidence from one of the world’s largest financial institutions.
