SMBC to Sell Rs.6,000 Crore Stake in Kotak Mahindra Bank to Fund Yes Bank Investment

Japanese lender Sumitomo Mitsui Banking Corporation (SMBC) is preparing to sell its entire 1.65% stake in Kotak Mahindra Bank through block deals on Tuesday, September 9.

The stake sale involves 3.28 crore shares and is expected to fetch around ₹6,000 crore. Brokerages have already reached out to foreign institutional investors (FIIs) and mutual funds to explore their interest in the transaction.

Why SMBC is Selling Kotak Stake

SMBC is reportedly divesting its holding in Kotak Mahindra Bank to free up capital for its planned investment in Yes Bank. Recently, the Reserve Bank of India (RBI) approved SMBC’s proposal to acquire up to 24.99% stake in Yes Bank, while clarifying that the Japanese lender will not be treated as a “promoter,” sparing it from additional regulatory requirements. Earlier this month, the Competition Commission of India (CCI) also cleared the deal.

In May, SMBC had announced a 20% stake purchase in Yes Bank worth ₹13,482 crore, marking the largest-ever cross-border investment in the Indian banking sector. The bank has also sought approval to raise its holding further by an additional 4.9%.

The 20% stake sale in Yes Bank will involve a major offloading by existing shareholders. State Bank of India (SBI) will sell a 13.19% stake, while seven other banks — Axis Bank, Bandhan Bank, Federal Bank, HDFC Bank, ICICI Bank, IDFC First Bank, and Kotak Mahindra Bank — will collectively sell 6.81%.

This restructuring is part of Yes Bank’s recovery journey. After its financial position worsened sharply in March 2020, the RBI superseded its board and facilitated a rescue plan led by SBI and other Indian banks.

About SMBC

Sumitomo Mitsui Banking Corporation (SMBC) is a Japanese multinational banking financial services institution owned by the Sumitomo Mitsui Financial Group, which is also known as the SMBC Group. It is headquartered in the same building as SMBC Group in Marunouchi, Chiyoda, Tokyo, Japan.

SMBC was established in 2001 through the merger of The Sakura Bank, which originated from the Mitsui zaibatsu and was founded as Mitsui Bank in 1876, and The Sumitomo Bank, which originated from the Sumitomo zaibatsu and was founded in 1895.