Private sector lender Kotak Mahindra Bank on Thursday announced the launch of a qualified institutional placement (QIP) to sell 6.2 crore shares. The lender plans to raise around Rs 5,662 crore through the share sale. The price band for the QIP has been set at Rs 930-936. The lender will raise more than Rs 5,800 crore when calculated at the upper end of the price band.
This share sale is part of the stake reduction exercise by its promoter Uday Kotak, the executive vice-chairman of the bank, as per the advice of the Reserve bank of India.“Shareholders of the bank have approved and declared the opening of (QIP) the issue today,” Kotak Mahindra Bank said in a regulatory filing on the stock exchanges.
The proposed capital dilution works out to 3.37% on the current equity base. Shares of Kotak Mahindra Bank on Thursday ended up 1.12% at Rs 936.85 on the BSE. The RBI had issued a directive that Uday Kotak would need to reduce his stake in the bank to 30% by June 2017 and 20% by December 2018.
In March, Uday Kotak had sold 2.7 crore shares, reducing his stake in the bank to 31.8% from 33.3%. On March 30, the bank’s board had approved a proposal to raise capital through an equity offer by issuing up to 6.2 crore shares of Rs 5 each.
The bank had cited four reasons for fund-raising. These are to pursue consolidation opportunities in the banking and financial services space, capitalise on opportunities in acquisition and stressed assets resolution, including joining a bad bank, mop up additional avenue for organic growth like more international lending and infuse capital into subsidiaries.