Founder and Managing Director of Kotak Mahindra Bank Ltd, Uday Kotak is all set to sell stakes worth around Rs 6,000 crore in the private sector lender. This is a move to comply with a settlement agreement struck with the Reserve Bank of India (RBI) in January on promoter stake dilution. The stake sale is expected to happen at Rs 1,215 – 1,240 per share. The pricing of the sale, most likely to be executed on Tuesday, the 2nd of June, represents 0.7% to 2.7% discount to Monday’s closing price of Rs 1,248 per share. The promoter stake sale will happen via a block. Morgan Stanley, Goldman Sachs and Kotak Securities are the advisors to the block deal.
What this means:
The move will signal an end to the extended standoff between the regulator and the bank over the reduction in promoter shareholding. This move comes after the bank had, on Saturday, raised Rs 7,442.5 crore through a qualified institutional placement (QIP) of its shares. During the month of January 2020, RBI had agreed to Kotak Mahindra bank’s proposal to reduce promoter stake to 26 percent from the current 29.9 percent over the next six months. Additionally, it was also agreed that promoter voting rights will be capped at 20 percent of the paid-up voting share capital until March 31 and will be further capped at 15 percent, effective April 1. Kotak Mahindra Bank had informed then that the promoters will not purchase any further ‘paid-up voting equity shares’ of the bank till the promoter shareholding reaches 15 percent. With this settlement agreement, the bank has decided to withdraw the writ petition filed in the High Court of Bombay after RBI struck down its proposal to issue perpetual non-convertible preference shares to comply with promoter shareholding norms.