Renowned financial institution Kotak Mahindra Bank has apparently made it to the headlines for its announcement of planning to launch a share sale to institutional investors. Reliable reports affirm that this share sale has been targeted toward raising as much as $2 billion in multiple tranches, in a scenario where the lender seeks to find a way to dilute the promoter’s shareholding in a bid to adhere to the set regulations and raise funding.

As per sources familiar with the knowledge of the matter, Kotak Bank initially plans to an institutional share sale of fresh equity this week, worth INR 7,500 crore. Post this, promoter Uday Kotak will sell close to 57 million shares to public investors. This holding is reportedly valued at a staggering INR 6,600 crore at the current price. The transaction comes at a crucial time when banking establishments are in need of funding to combat the issues cropping up pertaining to bad loans, due to the dreaded COVID-19 pandemic.

Reportedly, the share sale is being held in order to dilute Uday Kotak’s equity holding in the bank so as to comply with RBI regulations. Recently on February 18, the RBI had provided a timeline of six months to bring it down to 26%.  held a on March 31. The QIP (qualified institutional placement) issuance, likely to be held early this week, is anticipated to lead to a dilution of around 3.4% of the bank’s equity and reduce Uday Kotak’s shareholding to 28.94% from the 29.92% stake he holds. The sale of 57 million shares is further likely to reduce this to 26%.

One of the people familiar with the proceedings has been quoted to state that Kotak plans to launch the sale within a day or two since they have received fairly decent investor response. Goldman Sachs, Kotak Mahindra Capital, Morgan Stanley, and SBI Capital Market are managing the share sale, claim sources.

Source Credits: https://economictimes.indiatimes.com/markets/stocks/news/kotak-bank-set-to-launch-2-billion-mega-share-sale/articleshow/75990176.cms