First Abu Dhabi Bank Eyes $5 Billion Stake in Yes Bank

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According to sources familiar with the matter, First Abu Dhabi Bank PJSC is reportedly among the potential buyers for a sizable $5 billion stake in India’s Yes Bank Ltd. These sources, who requested anonymity due to the private nature of the discussions, revealed that the Middle Eastern lender is considering a bid for up to a 51% stake in Yes Bank. The interest in the stake sale has also drawn preliminary attention from Japan-based banks, including Mitsubishi UFJ Financial Group Inc. and Sumitomo Mitsui Financial Group Inc. However, the extent of their interest and whether they will move forward with a bid remains uncertain.

Shares in Yes Bank surged by as much as 8.5% on Thursday, marking the largest one-day gain in nearly a week. The stock has appreciated by approximately 25% this year, bringing the Mumbai-based bank’s market valuation to $10 billion.

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The deliberations are ongoing and the specifics of the stake sale, including the size, could still evolve. There is also the possibility that the banks involved may ultimately decide against pursuing the deal or might explore alternative investment avenues.

First Abu Dhabi Bank issued a statement on Thursday categorically denying any evaluation of a potential offer for a stake in Yes Bank. Representatives from MUFG and SMFG declined to comment, and Yes Bank did not immediately respond to requests for comments.

This week, Yes Bank stated that it has not received approval from the Reserve Bank of India for a 51% stake sale. The State Bank of India, which rescued Yes Bank four years ago amid a spate of bad loans, has reduced its holdings but remains the largest shareholder with a 24% stake. Notably, SBI’s chairman Dinesh Khara’s term is set to expire in August, which could potentially delay any deals involving Yes Bank. A government-appointed panel has recommended Challa Sreenivasulu Setty as Khara’s successor.

Mergers, acquisitions, and share sales are surging in India as global investors are eager to tap into the country’s robust economic growth. Middle Eastern financial institutions, like First Abu Dhabi Bank, are seeking overseas expansion opportunities, targeting lenders in regions such as Turkey and Egypt, alongside Standard Chartered Plc.

Japanese banks, including the likes of MUFG, have been exploring opportunities to enhance their lending revenues and expand their investment banking operations. Bloomberg News has reported that MUFG is also considering a minority stake in HDFC Bank Ltd.’s consumer lending unit.