Sumitomo Mitsui Doubles Down On India With Plan To Buy Stake In Yes Bank For $1.6 Billion

Tokyo-based Sumitomo Mitsui Banking Corp. (SMBC) has agreed to buy a 20% stake in India’s Yes Bank for 135 billion rupees ($1.6 billion) as the Japanese lender deepens its presence in the world’s most-populous nation.

Sumitomo Mitsui, a unit of the Sumitomo Mitsui Financial Group, will buy the shares from the State Bank of India and other Yes Bank shareholders for about 21.50 rupees apiece, the Japanese lender said in a statement late Friday.

Upon completion of the deal, Sumitomo Mitsui will be the biggest shareholder of Yes Bank. It is buying about 13.2% of the Indian lender from State Bank of India and the rest from HDFC Bank, ICICI Bank, Kotak Mahindra Bank, Axis Bank, IDFC First Bank, Federal Bank and Bandhan Bank, according to the statement.

The State Bank of India and other shareholders injected fresh capital into Yes Bank in 2020 when the lender grappled with bad loans. Since then earnings at Yes Bank, which also counts Carlyle Group and Advent International among its investors, have recovered.

“With this investment, SMBC will gain access to one of the largest private sector commercial banks in India, which will allow us to further accelerate SMBC Group’s business in India,” Sumitomo Mitsui said in the statement.

The deal is subject to regulatory approvals from the Reserve Bank of India and the Competition Commission of India. “SMBC Group established an Indian Division in April this year to strengthen its focus and commitment to India and accelerate its growth strategy,” according to the Japanese lender.

The Yes Bank deal comes a year after Sumitomo Mitsui took full ownership of Fullerton India Credit Co., a provider of housing and car loans, after initially acquiring close to 75% in 2021.

With a network of more than 1,200 branches across India, Yes Bank provides a wide range of financial services to retail customers as well as large corporate clients. The lender was cofounded in 2004 by Indian banker Rana Kapoor and his late brother-in-law Ashok Kapur, who died in the terror attacks in Mumbai in 2008. A former billionaire, Kapoor had to step down as CEO in 2019 when the bank faced problems of bad loans. In 2020, Kapoor was jailed over an alleged fraud case and was later released on bail.

“We are excited to welcome SMBC, a globally renowned financial partner, as a major shareholder whose investment marks a pivotal step in our next phase of growth,” Prashant Kumar, managing director and CEO of Yes Bank, said in a separate statement, “We expect to benefit from their global expertise and high governance standards. This investment is a powerful endorsement of our transformation journey and future potential.”