Mumbai: Japan's Sumitomo Mitsui Banking Corp. agreed to pay 13.7 billion rupees ($293 million) for a 4.5 percent stake in Kotak Mahindra Bank, sending shares of India's fourth-largest lender up more than 3 percent Wednesday.
Kotak said it would issue Sumitomo Mitsui 16.4 million shares at 833 rupees ($17.90) per share, higher than Tuesday's closing price of 744.6 rupees on India's National Stock Exchange.
"We see this as a significant opportunity for two financial conglomerates to leverage their strengths to serve the Indo-Japan corridor across a range of financial services," Kotak managing director Uday Kotak said in a statement.
The two companies also said they signed a cooperation agreement to work together on cross-border business, investment and trade, including asset management and investment banking.
Kotak is India's fourth-largest private sector bank by market capitalization, with assets of 551.2 billion rupees ($11.8 billion) and 7 million customers.
Sumitomo Mitsui Banking Corp. is a unit of Sumitomo Mitsui Financial Group, Japan's second-largest banking group, which has $1.37 trillion in total assets.
Sumitomo said it expects the sale, which is subject to shareholder and regulatory approval, to close by September. AP