Why MUFG is the favourite to win Yes Bank's hand
Subscribe to enjoy similar stories. Japan's Mitsubishi UFJ Financial Group (MUFG) has emerged as the favourite to acquire a majority stake in Yes Bank as it is agreeable to the regulatory cap on voting rights in private banks, three people aware of the matter said. Meanwhile, other potential bidders Sumitomo Mitsui Banking Corp.
(SMBC) and Emirates NBD see the 26% voting rights cap as a deal-breaker. "MUFG has started due diligence last week after SMBC and Emirates NBD dropped out due to the Reserve Bank of India's cap on voting rights," one of the three people cited above said. MUFG is attracted to India's financial services space given its growth prospects, and has hired JP Morgan to advise on the transaction, the second person added.
Earlier this year, it was looking to pick up a majority stake in HDFC Bank's subsidiary HDB Financial, a plan that did not bear fruit. A spokesperson for MUFG declined to comment. Queries emailed to Yes Bank remained unanswered.
However, the person cited above said Emirates NBD is not out of the race. “It is awaiting the bid document. But there are several deal-breakers to this discussion," the person said.
Talks with MUFG may be crucial for Yes Bank -- Several potential suitors have dropped out in its search for a new owner spanning more than six months, due to India's banking regulations capping voting rights in any private bank at 26%. MUFG’s due diligence aims to assess Yes Bank's business to consider an option subsequently to become its new promoter. “The negotiations are still around a valuation of $8-10 billion," said the second person.
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