Japanese Bank SMBC to Divest Stake in Kotak Mahindra Bank Ahead of Yes Bank Acquisition

Sumitomo Mitsui Banking Corporation (SMBC), a prominent Japanese financial institution, is preparing to sell its entire 1.65% stake in Kotak Mahindra Bank through a block deal valued at approximately ₹6,166 crore. This strategic move comes as SMBC positions itself to acquire up to a 24.99% stake in Yes Bank, following recent regulatory approvals.

Details of the Block Deal

The proposed sale involves approximately 3.28 crore shares of Kotak Mahindra Bank, with a floor price set at ₹1,880 per share, reflecting a discount of about 4.1% from the bank’s last closing price. The transaction is expected to attract significant attention from institutional investors, including foreign institutional investors (FIIs) and mutual funds, who have been approached to gauge interest in the deal.

Strategic Rationale Behind the Sale

SMBC’s decision to divest its stake in Kotak Mahindra Bank is primarily driven by its plans to acquire a substantial holding in Yes Bank. In May 2025, SMBC announced its intention to purchase a 20% stake in Yes Bank for ₹13,482 crore, marking the largest-ever cross-border investment in the Indian banking sector. This acquisition includes a 13.19% stake from the State Bank of India and a combined 6.81% from several other domestic lenders, including Axis Bank, HDFC Bank, ICICI Bank, and Kotak Mahindra Bank.

Regulatory Approvals and Implications

The Reserve Bank of India (RBI) has granted approval for SMBC’s proposal to acquire up to 24.99% of Yes Bank’s equity, with the condition that SMBC will not be classified as a “promoter” of the bank. This classification would have imposed additional regulatory obligations on SMBC. Additionally, the Competition Commission of India (CCI) has approved the stake purchase, further facilitating SMBC’s entry into Yes Bank.

Market Reactions and Outlook

Following the announcement of the stake sale, Kotak Mahindra Bank’s shares have experienced increased trading activity, with a slight uptick in share prices. The block deal is anticipated to influence investor sentiment and may lead to short-term volatility in the stock’s performance. Investors are advised to monitor developments closely, as the completion of SMBC’s acquisition of Yes Bank could have significant implications for the Indian banking sector.

Conclusion

SMBC’s divestment from Kotak Mahindra Bank and its impending acquisition of a substantial stake in Yes Bank underscore the dynamic shifts occurring within the Indian banking landscape. These developments highlight the increasing interest of foreign financial institutions in the Indian market and may pave the way for further consolidation and strategic partnerships in the sector