Sumitomo Mitsui will sell its 1.65% Kotak stake via block deals worth around ₹6,000 crore.
Funds to support its ₹14,000 crore Yes Bank investment.
Kotak stock flat; Yes Bank deal cleared by RBI and CCI.
Japanese banking giant Sumitomo Mitsui Financial Group (SMFG) is reportedly looking to sell its entire 1.65% stake in Kotak Mahindra Bank through block deals. The proposed sale of around 3.28 crore shares is expected to raise close to ₹6,000 crore, a report by CNBC-Awaaz on September 9 revealed.
FIIs and mutual funds have also been approached by brokerages for potential interest in the block deals, added CNBC-Awaaz.
The move comes as Sumitomo looks to redeploy capital into its much larger bet on Yes Bank. Last month, the Reserve Bank of India (RBI) cleared the Japanese lender to acquire up to 24.99% of the private sector lender. Moreover, the central bank also clarified that SMFG would not be categorised as a “promoter” of Yes Bank, obligating the group with additional regulatory norms.
Competition regulator CCI followed with its own nod earlier this month, paving the way for one of the most significant foreign investments in India’s banking sector.
In May, SMFG and Yes Bank disclosed that the Japanese group would invest nearly ₹14,000 crore for a 20% stake, making it the largest cross-border M&A transaction in the country’s financial services space.
The deal involves buying a 13.19% stake from State Bank of India and another 6.81% from a consortium of banks including Axis Bank, Bandhan Bank, Federal Bank, HDFC Bank, ICICI Bank, IDFC First Bank and Kotak Mahindra Bank.
Meanwhile, shares of Kotak Mahindra Bank were little moved by the development, trading almost flat. Earlier this year, Kotak Mahindra Bank reported a softer performance, posting a 7% year-on-year drop in standalone net profit for the June quarter at ₹3,282 crore, despite a 6% rise in net interest income to ₹7,259 crore.
For Kotak, Sumitomo’s planned exit may not alter fundamentals immediately, but for Yes Bank, the deal represents a major infusion of capital and a strong vote of confidence from one of the world’s leading financial groups.
