Kotak Mahindra Bank has launched a qualified institutional placement (QIP) on Tuesday to raise to Rs 7,500 crore and set a floor price of Rs 1,147.75 per share, at about half a percent discount to the closing price.
The bank’s board approved a floor price of Rs 1,147.75 per share for the sale as against Tuesday’s closing price of Rs 1,152.45 apiece as per the laid out formula, according to regulatory filings. The share sale through the QIP route will help the bank’s promoter group led by Uday Kotak decrease their stake in the bank by 3.4%, and help comply with the Reserve Bank of India’s order to have the holding down to 26% by August this year, as against 29.9% as of March. The Kotak Mahindra Bank has said that it may “at its discretion consider offering a discount of not more than 5 percent on the floor price so calculated for the issue.”
Due to the coronavirus provisions, Kotak Mahindra Bank posted a 4 percent fall in consolidated net profit at Rs 1.951.82 crore for the quarter ended on March 31st 2020. The bank had reported a profit of Rs 2,038.27 crore in the corresponding quarter of the preceding fiscal. Following the RBI circular dated April 17, 2020, the board of directors of Kotak Mahindra Bank did not recommend any dividend for 2019-20.
“Subject to relevant laws and guidelines, our Bank
expects to use internet Proceeds to strengthen its capital base and strengthen
its record, which might assist our Bank in dealing with
contingencies or financing business opportunities (which could also
be organic or inorganic), or both, which can arise according to the economic events driven by the outbreak
of coronavirus, or otherwise,” said the bank in its draft offer document.
Uday Kotak had said on May 13 that the bank was working on various fronts to get the promoter shareholding to the desired level. He also said the lender wants to be ready with money for a possible opportunity of consolidation in the financial services space.
The net worth of the bank will rise by 14.5 percent to Rs 56102.4 crore. This means the value per share of the bank will rise by 10.7 percent to Rs 283.6 per share. Following the share sale, the promoter’s stake within the bank will reduce to 28.94 percent from 29.92 percent earlier.
