The banking division of Sumitomo Mitsui Financial Group Inc. (SMFG), Japan's second-largest lender, has entered into an agreement to acquire a 20% stake in Indian lender Yes Bank Ltd. This is reported in a press release (SMFG.
The deal is valued at 135 billion rupees ($1.58 billion) at a price of 21.50 rupees per share. At the same time, the total market value of Yes Bank is $6.6 billion.
As part of the deal, SBI, India's largest lender and majority shareholder of Yes Bank with a 24% stake, plans to sell 13.2% of shares. In addition, HDFC Bank Ltd., ICICI Bank Ltd., Kotak Mahindra Bank Ltd., Axis Bank Ltd., IDFC First Bank Ltd., Federal Bank Ltd. and Bandhan Bank Ltd. intend to sell part of the assets of Yes Bank.
Investment companies Carlyle Group Inc. and Advent International are minority shareholders of Yes Bank.
Citigroup Inc. is acting as an advisor to Yes Bank, while JPMorgan Chase & Co. and Jefferies Financial Group Inc. are consultants to Sumitomo Mitsui. The transaction is subject to the approval of Reserve Bank of India and the Competition Commission of India.
State Bank of India has reduced its stake in Yes Bank, which was acquired several years ago to save the bank from bankruptcy due to bad loans. At the same time, State Bank of India remains the largest shareholder of Yes Bank with a 24% stake. Yes Bank also considers private equity firms Carlyle Group Inc. and Advent International as minority investors.
The deal with Sumitomo Mitsui is the largest foreign investment in India's banking sector and is aimed at expanding the presence of Japanese lenders in the country. According to analysts, India's $4 trillion domestic-oriented economy is better able to withstand a global recession than many other countries.
Japan's aging population and slow economic growth are forcing Japanese companies to look for opportunities to expand in other countries, leading to a sharp increase in the number of overseas transactions. In particular, in April Nomura Holdings Inc. signed an agreement to acquire some assets of Macquarie Group Ltd. in the United States and Europe for $1.8 billion.
Sumitomo Mitsui is a large Japanese banking corporation and the second largest bank in Japan. SMFG has $2.7 trillion in assets under management and offers a wide range of financial services related to banking operations, including credit card servicing, leasing, information services, and securities. The headquarters is located in Tokyo (Japan).
Yes Bank is an Indian private sector bank with headquarters in Mumbai, India. The bank operates a network of 1,198 branches and 1,287 ATMs.
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