SMFG Considers Additional $1.1 Bn Investment to Boost Yes Bank Stake

Sumitomo Mitsui Financial Group (SMFG) is considering a $1.1 billion investment to increase its stake in Yes Bank to 25%. The deal would involve acquiring 5% stake from Carlyle Group and buying $680 million in convertible bonds issued by Yes Bank. The proposed increase keeps SMFG under the 26% threshold that would trigger a mandatory open offer for an additional 25% stake.

Sumitomo Mitsui Financial Group (SMFG) is reportedly considering a significant investment to increase its stake in Yes Bank. According to Bloomberg, the Japanese financial major is exploring an additional $1.1 billion investment, which would involve acquiring a 5% stake from the United States-based investment fund Carlyle Group and other minority shareholders. Additionally, SMFG may also purchase $680 million in convertible bonds issued by Yes Bank [1].

This proposed investment would bring SMFG's total shareholding in Yes Bank to 25%, just shy of the 26% threshold that would trigger a mandatory open offer for an additional 25% stake under Securities and Exchange Board of India (Sebi) regulations [1]. The open offer would require SMFG to offer its shares to existing shareholders at a predetermined price.

Yes Bank's share price jumped over 3% on Tuesday, July 16, following the reports of SMFG's potential investment [2]. The bank's stock has shown resilience, trading 24% below its 52-week high of ₹27.20 but up 5% year-to-date in 2025.

Credit rating agency ICRA has also upgraded Yes Bank’s Infrastructure Bonds and Basel III Tier II Bonds worth ₹24,460.80 crore to ‘ICRA AA- / Stable’, reflecting the bank’s improving fundamentals [2]. This upgrade comes amidst Yes Bank's efforts to enhance its operational recovery and maintain a sustainable growth profile.

Despite a quarter-on-quarter decline in both advances and deposits in Q1FY26, Yes Bank's CASA (Current Account and Saving Account) ratio stood at 32.7% in June 2025, up from 30.8% a year ago [2]. The bank's efforts to improve asset quality and manage its capital and liability continue to drive its operational recovery.

The proposed investment by SMFG underscores its growing interest in expanding its footprint in India's banking sector through strategic investments in one of the country's leading private lenders. The deal, if approved, could provide Yes Bank with the necessary capital to boost its growth and strengthen its financial position.

References:
[1] https://www.business-standard.com/companies/news/smfg-yes-bank-stake-sale-increase-investment-125071500647_1.html
[2] https://www.livemint.com/market/stock-market-news/yes-bank-shares-surge-after-report-of-smfg-eyeing-1-1-bn-investment-5-stake-buy-11752565867627.html