Mitsubishi UFJ Financial Group leads race to acquire majority stake in Yes Bank: Report

Current discussions center around a valuation of $8-10 billion for Yes Bank.

Japan's Mitsubishi UFJ Financial Group (MUFG) has emerged as the frontrunner to acquire a majority stake in Yes Bank, as it is willing to comply with the Reserve Bank of India's (RBI) regulatory cap on voting rights in private banks, Mint has reported.

Rival bidders, including Sumitomo Mitsui Banking Corp (SMBC) and Emirates NBD, have withdrawn from the process due to concerns regarding the 26 percent voting rights limit, the report cited sources as saying.

“MUFG began its due diligence last week after SMBC and Emirates NBD opted out because of the RBI’s voting rights cap,” the report cited sources as saying. MUFG has expressed interest in India’s financial services sector, attracted by its growth potential, and has engaged JP Morgan for advisory support in the acquisition.

Moneycontrol couldn’t verify the report independently.

Earlier this year, MUFG sought a majority stake in HDFC Bank’s subsidiary HDB Financial but that attempt was unsuccessful. A spokesperson for MUFG declined to comment on the ongoing discussions, and queries sent to Yes Bank remained unanswered, the report said.

Though it has stepped back, Emirates NBD is monitoring the situation and awaiting the bid document, the report said.

The negotiations with MUFG are crucial for Yes Bank, which has struggled to find a new owner over the past six months, largely due to voting rights restrictions, the report said.

The current discussions centre around a valuation of $8-10 billion for Yes Bank. MUFG could opt to acquire more than the 26 percent stake required by RBI, as failing to do so would impede the ability to launch an open offer needed to take on the promoter role, the report said. While banking and stock market regulators may permit such an offer under special circumstances, MUFG's situation remains fluid.