The bank plans to issue 6.2 crore shares for Rs 913.24 per share on the issue day as May 11.
Kotak Mahindra Bank’s Board of directors has approved a qualified institutional placement (QIP) issue at a price per share of Rs 913.24 to raise capital of about Rs 5600 crore.
The bank plans to issue 6.2 crore shares for Rs 913.24 per share on the issue day as May 11, according to a filing by Kotak bank with the BSE.
QIP is to help companies raise funds domestically instead of tapping overseas markets. In a QIP, a listed company can issue equity shares, fully and partly convertible debentures, or any securities other than warrants which are convertible to equity shares to a qualified institutional buyer (QIB).
The country's fourth-largest private bank will raise funds primarily to reduce the bank’s promoter shareholding, look at potential mergers and acquisitions and opportunities to buy stressed assets in the banking system.
A meeting of the securities issuance committee is scheduled to be held on Tuesday, May 16, 2017, to, among other things, consider and approve the issue price of the equity shares proposed to be issued, the company filing added.
Following the QIP issue, promoters’ stake in the lender may fall to below 30 percent. The move is geared towards complying with a Reserve Bank of India (RBI) directive that promoters reduce their holding to 30 percent by June this year.
After the capital raising, the bank's capital adequacy ratio (CAR) would rise to about 20 percent from 16.8 percent on a consolidated basis as on the March quarter.
On Tuesday in an extraordinary general meeting, shareholders of the bank approved increasing the limit for foreign shareholding to 49 percent of paid-up capital and the issue of 6.2 crore shares with a face value of Rs 5 each through a private placement, rights issue or QIP. On March 30, the bank’s board had approved the proposal.
Kotak bank’s current foreign investors’ limit is 42 percent of the capital, as approved by shareholders and RBI. At the end of March, foreign investors held 38.56 percent.On Thursday, Kotak Bank’s shares ended at Rs 936.85 per share, up by 1.12 percent from its previous close.Get access to India's fastest growing financial subscriptions service Moneycontrol Pro for as little as Rs 599 for first year. Use the code "GETPRO". Moneycontrol Pro offers you all the information you need for wealth creation including actionable investment ideas, independent research and insights & analysis For more information, check out the Moneycontrol website or mobile app.