News Column

Promoter Offloads Stake In Kotak Mahindra Bank; Canadian Pension Fund Buys

June 3, 2014

To comply with RBI's directions, Vice Chairman and MD of @Kotak_Mahindra Limited, Uday Kotak has sold 2.4 Cr shares of the bank for a total of R2198.6 Cr. The shares comprising 3.24% stake in the private lender were picked by the Canada Pension Plan Investment Board at unit price of R880 from the open market.

The above sale trims the promoters holding to 40.33% from 43.85%. As per RBI's instruction the company had to reduce its promoters holding to 40% by September from 43.58% and further cut it to 30% by 31 December 2016. Earlier in a directive in June, the central bank had advised the bank to bring promoter holding down to 20% by 31 March 2018 from 45.21% then.

Uday Kotak holds 39.76% stake directly whereas 3.49% through Kotak Trustee Company of which he is the beneficiary. The remaining promoter stake is held by other family members of the Kotak Family.

With this CPPIB's stake gets hiked to 4.65% as the fund held 1.41% stake at the end of last fiscal and becomes the largest non promoter shareholder of the bank

The other non promoter shareholders include Sumitomo Mitsui Banking Corporation (4.26%), EuroPacific Growth Fund (4.08%), Caladium Investment (2.60%), Matthews Pacific Tiger Fund (1.58%) among others.

The dilution of equity is in line with the RBI's policy that no promoter should hold more than 10%. This policy was meant to have a diversified ownership of the private lenders.

However recently, the PJ Nayak committee on governance in banks proposed that promoters be allowed to retain up to 25% equity stake in banks.

According to the Nayak committee, since a separate category of investors, namely, authorised banks investors, comprising all diversified funds discretionally managed, are proposed to have up to 20% stake, promoters should be allowed more.

Other lenders @Yes_Bank Limited with 25.55% promoter holding, @IndusInd Limited with promoter holding at 15.21%, and DCB Bank Limited with 18.46% holding may have also been earlier asked to reduce their promoter stake.

For the new banking industry entrants the regulator has the maximum promoter shareholding at 15%.

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Source: DealCurry (India)

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