Exclusive-Japan's SMBC in talks to increase stake in Vietnam's VPBank, sources say

Japan's Sumitomo Mitsui Banking Corp (SMBC) is engaged in advanced negotiations to increase its ownership stake in Vietnam's private lender, VPBank, according to four sources familiar with the discussions. SMBC, which is part of the Sumitomo Mitsui Financial Group, currently holds a 15% stake in VPBank, and is aiming to raise this to approximately 20%, the sources said while maintaining anonymity as the details are not yet public.

The Japanese lender made its initial investment in the bank in 2023, valuing it at $1.5 billion. Both parties plan to finalize the deal this year, but they are at odds over the valuation, with negotiations having been ongoing for several months.

An expanded stake would provide SMBC with greater access to Vietnam's burgeoning banking market, which is projected to experience rapid growth due to the country's increasing economic prosperity, rising household wealth, and growing foreign investment. The increased investment would also enhance SMBC's access to Vietnamese consumers and businesses, particularly in the insurance and credit sectors.

VPBank, currently seeking a significant premium for its shares, is expected to raise between $700 million and $900 million from the sale of new shares, according to a report by Swiss advisory firm Turicum Investment Management. A 5% stake in VPBank would be valued at around $425 million. SMBC, however, is hesitant to pay such a premium and has considered increasing its holding through open-market purchases instead of a private placement.