The billionaire banker is said to have sold the shares at the higher end of that band, dealers said.
The deal comes within days of the bank raising over Rs 7,400 crore through a qualified institutional placement of shares over the weekend.
Mumbai: Asia’s richest banker Uday Kotak sold 56 million shares, or 2.8 per cent stake, for more than 6,900 crore through block deals on Tuesday to reduce his stake in Kotak Mahindra Bank to 26.1 per cent in a move to comply with Reserve Bank of India (RBI) regulations.
The buyers included a group of international and domestic investors including Fidelity Funds South East Asia, Invesco Oppenheimer, Goldman Sachs India, JP Morgan, UBS, Regents of University of California, Aberdeen, Capital Group, Canada Pension Plan Investment Board (CPPIB), Societe Generale, SBI Mutual Fund, Birla MF, Axis MF and ICICI Prudential Life Insurance, according to a BSE filing by Kotak Mahindra Bank. Sovereign wealth funds of Singapore (GIC), Kuwait (Kuwait Investment Authority) and Abu Dhabi (Abu Dhabi Investment Authority) also invested, it said. Invesco Oppenheimer already holds a 2.86 per cent stake while Capital World has 1.9 per cent. SBI MF holds a stake of 2.56 per cent and CPPIB holds 6.2 per cent.
Uday Kotak collected an estimated $918 million (6,912 crore) through such deals, said a person whose organisation is associated with the fundraising exercise.
The price band was initially pegged at Rs 1,215-1,240 apiece. The billionaire banker is said to have sold the shares at the higher end of that band, dealers said.
The placement agents for the deal were Morgan Stanley, Kotak Securities, and Goldman Sachs (India) Securities.
In January, the RBI had allowed Kotak to hold a 26 per cent stake in Kotak Mahindra Bank as long as it didn’t raise capital through a share sale. The promoter’s voting rights were restricted to 15 per cent from April. Uday Kotak is also not allowed to top up his stake if it falls below 26 per cent. He has time until September to prune his holding by another 0.1 per cent in the bank to fully comply with the RBI rules.
Last week, Kotak raised Rs 7,442.5 crore through a QIP by issuing 65 million new shares at Rs 1,145 each. This QIP helped reduce Kotak’s stake to 29 per cent. It also helped the bank buffer its capital reserves. Several global long-only investors, pension money managers, sovereign funds and top local mutual fund houses bought most of the shares.
According to RBI guidelines, private bank promoters need to lower their holding to 40 per cent within three years, 20 per cent within 10 years and 15 per cent within 15 years of obtaining the banking licence. From the bank’s perspective, the share sale helps it shore up the capital base during an economic crisis, which will hold it in good stead if provisions have to be increased later this year. Analysts said the extra capital gives Kotak Mahindra a cushion against likely defaults in loans that are under moratorium. It could also prompt other private sector lenders to raise capital.
“About 25-30 per cent of the (Kotak) loan book is under moratorium and this number could easily double as RBI has further extended the timeline. So, in this environment, it would rather prefer raising money and be more cautious,” said Suresh Ganapathy, associate director, Macquarie Capital Securities. “I will not be surprised if there is a capital raising announcement done by large private sector banks and HFCs/NBFCs (housing finance companies/nonbanking finance companies.”
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