Kotak Mahindra to raise `5,500 cr via share sale

By: | Published: March 31, 2017 4:03 AM

Besides adding operational value, share sale will help promoter Uday Kotak comply with RBI directive of reducing his stake to 30% by end of June.

Uday Kotak, MD, Kotak Mahindra Bank.

Private sector lender Kotak Mahindra Bank said on Thursday in an exchange filing that its board has approved proposals to sell 6.2 crore shares – worth `5,363 crore at Thursday’s closing price of `865 apiece on the BSE — through a qualified institutional placement (QIP), rights issue, public issue or other methods of private placement.

According to a statement released by the bank, the funds will be used to pursue opportunities for consolidation in the banking and financial services space, including those in the area of acquisition and resolution of stressed assets and extending to participation in a bad bank.

On Wednesday, bank’s executive vice-chairman and managing director Uday Kotak had said, “We were among the first players in stressed assets since 2003. We understand this business extremely well. There are different ways you can deal with it — resolutions and turn around. We will be able to consider the whole range of these options. But it is an area which truly excites us and we believe we can add material difference to re-shaping the Indian financial sector in that space.”

The funds will also be used to “give thrust to additional avenues of organic growth such as new opportunities in digital expansion, domestic lending, international lending, etc,” and for the growth of the bank’s subsidiaries.

Apart from adding operational value, the share sale will help promoter Uday Kotak comply with Reserve Bank of India’s directive to reduce his stake in the bank to 30% by the end of June. He will have to subsequently reduce it to 20% by the end of 2018 and to 15% by March 31, 2020. As on December 31, Kotak’s shareholding stood at 33.3%, while the overall promoter stake was 33.61%.

Earlier this month, Uday Kotak had sold a 1.5% stake to two Canadian pension funds, Caisse de Depot et Placement du Quebec and Canada Pension Plan Investment Board.

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Shares of Kotak Mahindra Bank rose 0.70% and closed the session at `865.

A total of 36.72 lakh shares of Kotak Mahindra Bank were traded on the BSE and the NSE, higher than the stock’s three-month average of 29.70 lakh. The stock is trading at a price to book value of 4.45 against HDFC Bank’s 4.98, and ICICI Bank’s 1.74.

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