Kotak Mahindra Bank launches Rs 7,000-cr share sale through qualified institutional placement

Mumbai: Private sector lender Kotak Mahindra Bank on Tuesday launched its over Rs 7,000-crore qualified institutional placement (QIP) of shares.

The bank's board approved a floor price of Rs 1,147.75 per share for the sale as against Tuesday's close of Rs 1,152.45 apiece as per the laid out formula, according to regulatory filings.

The share sale through the QIP route will help the bank's promoter group led by Uday Kotak decrease their stake in the bank by 3.4 percent, and help comply with the Reserve Bank of India's (RBI) order to have the holding down to 26 percent by August this year, as against 29.92 percent as of March.

In the notification, the bank said it can consider offering a discount of not more than 5 percent on the floor price so calculated for the issue and the same will be decided by the board's issuance committee on Friday.

After applying the 5 percent discount, and assuming it sells all the 6.5 crore shares as announced on 22 April, the total issue size will come at Rs 7,087 crore.

The bank's capital adequacy ratio came at 17.89 percent with the core equity at 17.45 percent.

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Uday Kotak had on 13 May said there is a chance of consolidation in the financial services space as well and when an opportunity beckons, the bank wants to be ready with the money.

He had also said that the bank is working on various fronts to get the promoter shareholding to the desired level.

The RBI, which insists on promoter holdings to be at 15 percent for private-sector lenders, had agreed to let KMB's promoters have their holding at 26 percent by August but capped their voting rights at 15 percent to limit their decision-making influence.

KMB in December 2018 dragged the RBI to the Bombay High Court, after one of its earlier attempts to reduce promoter ownership through a complex debt instrument did not make the cut with the RBI.

The case was withdrawn by KMB after its suggestions to the RBI were approved in February this year.