Uday Kotak sells 2.83% stake in Kotak Mahindra Bank for Rs 6,944 crore

Billionaire banker Uday Kotak on Tuesday sold 2.83 per cent of the promoter group's holding in private sector lender Kotak Mahindra Bank for Rs 6,944 crore.

The share sale, executed through open market trades, will help Kotak comply with the RBI's stake reduction mandate as the promoter group stake will go down to 26.10 per cent, according to an exchange filing.

The deal comes within days of the bank raising over Rs 7,400 crore through a qualified institutional placement of shares over the weekend. The promoter holding in the bank had come down by a tad over 1 per cent from 29.8 per cent after the QIP issue.

Kotak had reached a settlement with the RBI earlier this year, as part of which the central bank had asked the promoter holding to come down to 26 per cent by August.

The shares were sold to marquee investors at the top end of the indicative price band of Rs 1,215-1,240 per share on Tuesday, market sources said.

As per the rules, price at which a share sale happens cannot be less than 1 per cent of the previous day's close, which gets the floor price at Rs 1,236, they said, adding that the shares were sold at Rs 1,240, the highest end of the band indicated earlier to investors.

Investors who bought the shares include global names like The Regents of the University of California, Oppenheimer Developing Market Fund, J P Morgan Securities, HSBC Global Investment Funds, Fidelity Funds - Emerging Market Fund, Societe Generale, Canada and Morgan Stanley Asia Singapore, among others.

Domestic institutions, including SBI Mutual Fund, Aditya Birla Sun Life Mutual Fund, ICICI Prudential Life Insurance Company and Nippon India Mutual Fund also bought the shares, they said.

Kotak now has time till mid-August for selling the remaining 0.10 per cent holding in the bank to comply with the RBI mandate. Last month, he had said that the bank is topping up on capital to participate in any opportunities that may come about because of its expectation of consolidation in the sector and also added that he was looking at multiple options to comply with the 26 per cent holding cap.

Even though the ownership has been capped at 26 per cent, the RBI has reduced the voting rights of the promoter group at 15 per cent as part of the arrangement reached earlier.

In the case of private-sector lenders, RBI mandates the ownership at 15 per cent for promoters to limit their influence in the running of any bank.

KMB had tried to reduce the ownership through a complex debt instrument in August 2018, which did not pass the regulatory muster. The bank dragged the regulator to the Bombay High Court in December of that year and withdrew the case in February this year after reaching the settlement.

The KMB scrip gained 7.52 per cent to close at Rs 1,343.20 apiece on the BSE on Tuesday, as against gains of Rs 1.57 per cent on the benchmark.