Sumitomo Mitsui likely to offload 1.65% Kotak Bank stake via block deals for ₹6,000 crore: Report

Japan’s Sumitomo Mitsui is likely to sell its entire 1.65% stake in Kotak Mahindra Bank through block trades, CNBC-Awaaz reported on September 9, citing people familiar with the matter. The sale would involve 3.28 crore shares and is expected to raise roughly Rs 6,000 crore, the channel said. Brokerages have approached foreign institutional investors and mutual funds to gauge potential interest in the block deals.

Last seen at 12:55 PM, shares of Kotak Mahindra Bank were trading nearly flat, down 0.26% at ₹1,945.20 apiece on the National Stock Exchange (NSE). The counter opened the day at ₹1,956.00, up from the previous close of ₹1,950.10.

The company’s market capitalisation currently stands at ₹3,86,787.50 crore. The stock’s 52-week high stands at ₹2,302 and the 52-week low at ₹1,679.05.

According to the report, Sumitomo intends to deploy the proceeds towards its transaction with Yes Bank. The channel said Sumitomo is looking to use the funds for the Yes Bank deal.

Regulatory approvals for the Yes Bank transaction have already been secured. Last month, the Reserve Bank of India approved SMBC to acquire up to 24.99% of Yes Bank and has decided that SMBC would not be treated as a "promoter" of Yes Bank following the deal, which would have involved additional regulatory requirements, Yes Bank said.

The competition regulator (CCI) also approved the Japanese bank’s stake purchase earlier this month. The broader Yes Bank arrangement was disclosed in May when banks informed stock exchanges that SMBC had inked a deal to take a 20% stake in Yes Bank for nearly ₹14,000 crore, a transaction described as the largest cross-border merger and acquisition in India’s financial sector. Under the pact, the Japanese lender agreed to buy a 13.19% stake from State Bank of India and an aggregate 6.81% stake from Axis Bank, Bandhan Bank, Federal Bank, HDFC Bank, ICICI Bank, IDFC First Bank and Kotak Mahindra Bank.

Kotak Mahindra Bank reported a net profit of ₹3,282 crore in the first quarter of the current financial year, marking a decline of 7% from ₹3,520 crore in the year-ago quarter.

The bank's provisions in Q1 more than doubled to ₹1,208 crore from ₹578 crore in the year-ago period. The bank's net interest income or the difference between interest earned on loans and expended on deposits rose 6% to ₹7,259 crore from ₹6,842 crore in the corresponding period last year.