Japan's SMFG considers making additional $1.1 bn investment in YES Bank

Nearly two months after acquiring a significant stake in private lender YES Bank, Japanese financial major Sumitomo Mitsui Financial Group (SMFG) is considering an additional investment of around $1.1 billion, Bloomberg reported on Tuesday.

According to the report, the deal would involve SMFG acquiring 5 per cent stake from the United States (US)-based investment fund Carlyle Group and other minority shareholders. Additionally, the Japanese major may also buy about $680 million in convertible bonds issued by YES Bank to help boost growth, the report added.

Earlier this year, SMFG acquired a 20 per cent stake in YES Bank for approximately $1.6 billion. State Bank of India and seven private lenders that had invested in YES Bank during its reconstruction in 2020, sold their stake to SMFG then.

If the latest deal goes through, its total shareholding in the Indian bank will rise to 25 per cent. However, according to Bloomberg, the deal is still under consideration with no financial decision made yet.

Importantly, the proposed increase keeps SMFG just under the 26 per cent threshold that, under Securities and Exchange Board of India (Sebi) regulations, would trigger a mandatory open offer for an additional 25 per cent stake.

According to Sebi regulations, an open offer is triggered when an acquirer's shareholding in a target company exceeds 25 per cent of the target company's total shares or voting rights.

Shares of YES Bank were trading up 2 per cent at ₹20.30 apiece on the BSE after the reports of the SMFG deal surfaced.

Yes Bank