Sumitomo Mitsui Banking Corporation (SMBC) agreed to buy a 20% stake in Yes Bank from the State Bank of India (SBI) and seven private sector lenders for ₹13,482 crore, causing shares to rise by over 8% on Monday.
After posting a 11% gain the previous day, today’s lender’s share price rose to ₹21.7 a piece representing an 8.39% boost. At 11:30 AM, the Nifty 50 too was up 3%, while the stock gained 2% to ₹20.39 per share.
Recording a 4.3 percent improvement for the year, the stock action on two successive days matched the 4.5 percent gain of Nifty 50 over the same.
According to exchange records, the combined market valuation of Yes Bank is ₹64,060.67 crore based upon BSE data.
Sumitomo has reached an end of their plans to take 20% stake
SBI and other loan providers in Yes Bank’s 2020 reconstruction will issue SMBC a 20% stake in the bank, a cross-border transaction that will be the biggest in the region of banking in India.
In addition, it has also signed up with HDFC Bank, ICICI Bank, Axis Bank, Kotak Mahindra Bank, Federal Bank, IDFC First Bank and Bandhan Bank to involve. The deal must be approved statutorily and under the regulatory provisions to continue appreciating.
According to Business Standard, SMBC wanted to acquire only a 20% stake, and the eight banks agreed to sell their stake pro rata. The Japanese lender's 20% stake purchase keeps its total holding below the 26% threshold, which would otherwise have resulted in a mandatory open offer to acquire another 25%.
SBI will sell its 13.19% stake in Yes Bank for ₹8,889 crore at ₹21.50 per equity share, representing an 18% premium to the lender's closing share price on Thursday. The deal values Yes Bank, a private sector lender, at $7.9 billion.
Seven private banks will sell 6.81% of Yes Bank for ₹4,594 crore, matching SBI's share price. The combined stake of SBI and the seven private banks is currently 33.71 percent. Following the transaction, SBI will own 10.78% of Yes Bank, with the remaining seven holding a combined 2.93%.
What prompted the stake sale?
In March 2020, SBI committed ₹7,250 crore to Yes Bank's reconstruction, while HDFC Ltd and ICICI Bank each invested ₹1,000 crore. Axis Bank contributed ₹600 crore, while Kotak Mahindra Bank invested ₹500 crore in Yes Bank's equity shares. IDFC First Bank, Bandhan Bank, and Federal Bank also made investments to save Yes Bank.
Following reconstruction, SBI held a 49 percent stake in the bank. Yes Bank had to retain up to 26% of SBI's equity investment and 75% of the equity invested by the other seven players for a three-year period.
