Kotak Mahindra Bank block deal today: SMBC to sell Rs 6,166 cr shares at 4% discount

Kotak Mahindra Bank Ltd (Kotak Bank) is in focus on Wednesday as Japan’s Sumitomo Mitsui Banking Corporation (SMBC), which recently bought stake in YES Bank, was looking to sell up to 3.28 crore shares or up to 1.65 per cent stake in the private lender at an offer price of Rs 1,880 apiece, as per the term sheet seen by Business Today. This is at 4.1 per cent discount to NSE's previous session's closing price of Rs 1,960.40. At this price, the block deal values at Rs 6166.40 crore or $700 million. 

Jefferies India and Nomura Financial Advisory and Securities (India) are joint placement agents for the Kotak Bank deal, with Kotak Securities and Jefferies India acting as trade executing placement agents. The transaction will be carried out by the way of one or more equity share sale on the screen-based trading platform.   

SMBC is a Japan-based commercial bank and is a wholly-owned subsidiary and a core operating entity of Sumitomo Mitsui Financial Group. SMBC is a foreign bank in India, with branches in New Delhi, Mumbai, Chennai and an offshore branch in GIFT City, Gandhinagar. SMBC provides a range of banking services, such as provision of loans, accepting deposits and provision of letters of credit in India.

Recently, the Competition Commission of India approved the acquisition of certain share capital and voting rights of YES Bank by Sumitomo Mitsui Banking Corporation. The proposed combination relates to the acquisition of share capital and voting rights of YES Bank by Sumitomo Mitsui Banking Corporation (SMBC). There were reports that SMBC was preparing to infuse an additional Rs 16,000 crore into YES Bank, through a mix of equity and yen-denominated bonds, to further strengthen its balance sheet.

On Wednesday, YES Bank said it has received the approval of the Reserve Bank of India for the proposed amendments to the Articles of the Bank in connection with nomination of two nominee directors by SMBC and one nominee director by SBI, on the board of directors of the bank, upon completion of the transactions contemplated under the SPA and other relevant agreements. 

The June quarter was a weak quarter for Kotak Bank as miss on provisions, fees and net interest income (NII) led to 13.7 per cent lower core profit after tax. While the NII was cushioned as cash was utilised to pay-off borrowings, Q2FY26 is seen impacting normal liquidity and 50 basis points repo cut, suggesting NIM decline sequentially. 

While loan growth was healthy at 4.2 per cent QoQ in Q1, it was led by SME and mid-market. Barring housing, retail growth was sluggish due to weak demand while unsecured recovery is slower, analysts noted.