State Bank of India (SBI), the nation's leading financial institution, is targeting to finalize a transaction by the end of March to sell its 24% holding in Yes Bank, valued at 184.2 billion rupees ($2.2 billion), according to four individuals with direct insight.
Japanese bank Sumitomo Mitsui Banking Corp and Dubai-based Emirates NBD are reportedly in the final stages of negotiations to purchase a controlling stake in Yes Bank, as disclosed by two of these sources. Sumitomo Mitsui is a subsidiary of Sumitomo Mitsui Financial Group, Japan's second-largest bank.
Both potential buyers are keen on securing a 51% stake in Yes Bank to gain significant control over its operations, revealed one source. The Reserve Bank of India (RBI) has given verbal approval to the plan, and due diligence is currently underway.
Yes Bank underwent restructuring by the RBI in March 2020, supported by a consortium of domestic banks, following a decline in its financial stability. SBI currently owns approximately 24% of Yes Bank, while 11 other banks, including ICICI Bank and HDFC Bank, hold a combined 9.74%. Two private equity firms, CA Basque Investments and Verventa Holdings, collectively hold an additional 16.05%.
Bidders are requesting a relaxation of the regulatory requirement for promoter shareholding to be reduced to 26% within 15 years of investment, and discussions are ongoing, according to one source. Emirates NBD, a prospective bidder for Yes Bank, has also shown interest in acquiring IDBI Bank and is waiting for that process to conclude.
The sources chose to remain anonymous as they are not authorized to speak to the media. SBI has denied any developments regarding this matter. Yes Bank has declined to comment on the speculative nature of the inquiries regarding the stake sale. Sumitomo Mitsui Banking Corp has also stated it will not comment on individual deals.
SBI has received verbal approval from the RBI to sell its entire stake in Yes Bank, with one source indicating that SBI expects to profit around 100 billion rupees. SBI had intervened to rescue Yes Bank during a liquidity crisis, but now that the situation has improved, it is considered wise to exit.
Once the RBI approves the bidders, the process is expected to proceed swiftly, allowing SBI to negotiate valuation with the bidders, according to two sources. At the current market price of 24.60 rupees, Yes Bank is valued at 770.95 billion rupees. Potential delays could arise due to market volatility in Japan and a concurrent government stake sale process in IDBI Bank, according to a fifth individual familiar with the situation.
