Several foreign banks, funds eye majority stake in Yes Bank

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A host of leading banks from Asia as well as some deep-pocketed sovereign funds and private equity firms are learnt to be eyeing a majority stake of 51 per cent stake in Yes Bank in a potential deal that could value the bank between $8 billion and $9.5 billion, even as the private lender has denied the Reserve Bank of India (RBI) granting approval for 51 per cent stake sale in it.

Five Banks – SBI, HDFC Bank, ICICI Bank, Kotak Mahindra Bank and Axis Bank — collectively hold 33.74 per cent stake in Yes Bank, with SBI alone accounting for the biggest chunk (23.99 per cent stake). The other large category of shareholders in the bank are: Foreign direct investors – 17.95 per cent (CA Basque Investment/ 8.74 per cent stake and Verventa Holdings/9.21 per cent) and foreign portfolio investors – 10.28 per cent.

The Indian banks are keen to exit their holding in Yes Bank “as their investment, which was part of the ‘Yes Bank Ltd. Reconstruction Scheme 2020’ (drafted by RBI and approved by the Government), made in March 2020, at ₹10 per equity share is only a financial investment and the purpose for which it was made has been served, said analysts.

The stake-sale process was initiated earlier this year and the names of potential buyers have been doing the rounds since then.

Potential buyers

According to a report by Bloomberg, First Abu Dhabi Bank PJSC, Mitsubishi UFJ Financial Group Inc and Sumitomo Mitsui Financial Group Inc seem to have emerged as front-runners for picking up the 51.69 per cent stake in the bank. Separately, sources told businessline that other big funds and some PE firms were also known to have shown interest.

On Tuesday, the bank strongly denied reports that its 51 per cent sale plan has received the RBI’s approval. “The RBI has not given any in-principle approval as stated in the article and this clarification is issued by the company voluntarily to dispel the baseless media article,” it said in an exchange filing.

On March 5, 2020, the RBI, in consultation with the Central government, superseded the board of directors of Yes Bank for 30 days owing to serious deterioration in its financial position. Seven banks and the erstwhile HDFC Ltd had pumped in ₹10,000 crore to rescue Yes Bank. Of this, SBI alone invested ₹6,050 crore, giving it 48.2 per cent stake in March 2020.

The bank’s shares touched a 52-week high of ₹32.85 in February this year from a low of ₹15.70 in October last year.