After the country’s largest bank , SBI rescued the beleaguered YES Bank four years back from the brink of collapse , the latter has been searching for a new owner . There have been many global financial entities and potential bidders which have shown interest in YES Bank such as , Japan’s Mizuho Bank , Emirates NBD and Japan’s Mitsubishi UFJ Financial Group (MUFG).
The latter is the second largest bank holding company globally and very eager to acquire a controlling stake in the banking firm . MUFG’s had earlier put in an investment proposal bid of $2 billion for HDB Financial which is the non-banking finance subsidiary of HDFC Bank . When the proposal was rejected by HDB Financial , MUFG has been reportedly engaged in serious discussion for a buyout of YES Bank .
However, MUFG had earlier withdrawn from the competition as it had only wanted to make a financial investment by acquiring a 20-24% stake in YES Bank without seeking board representation. The aim of MUFG was also to avoid activating an open offer for an additional 26% stake in YES bank, as this is mandated under Indian laws for listed entities.
Newspapers have reported that Japan’s Mitsubishi UFJ Financial Group (MUFG) has probably emerged as a frontrunner to acquire a majority stake in YES Bank since it is willing to comply with the Reserve Bank of India’s regulatory cap on voting rights for private banks whereas rival bidders such as Sumitomo Mitsui Banking Corp (SMBC) and Emirates NBD have withdrawn from the process due to concerns regarding the 26% voting rights limit.
Analysts tracking the news suggest that MUFG has expressed interest in the country’s financial services sector as they are quite attracted by its growth potential . For this MUFG has engaged major investment bank , JP Morgan for advisory support in the proposed acquisition. Japanese banking giant Mitsubishi UFG Financial Group (MUFG) has already invested Rs 2798 crores or around $334 million in Delhi based digital lending company DMI Finance Pvt Ltd showing the increasing appetite in the India’s financial sector. With the current valuation for YES Bank of around $8-10 billion and if the deal gets done then the 51% stake would result in the largest merger and acquisition for the country’s banking sector.
The YES Bank stock has come down currently to Rs 19 levels from Rs 25 levels a few months back . Analysts and market watchers tracking the banking sector expect some news from YES Bank in regard to the stake sale in the next few months and expect the stock to react positively. Investors and readers of this article should take proper investment advice from their broker before buying the YES Bank stock as some of the news could be speculative in nature . On the other hand , portfolio investors can accumulate the YES Bank stock at the current market rate of Rs 19.60 for smart investment gains over the medium to long term .