Heliconia to acquire 2.6% in Kotak Bank for Rs 1,296 crore

Bank to allot 20 million equity shares on preferential basis

Kotak Mahindra Bank today said Heliconia Pte, an affiliate of Government of Singapore Investment Corporation Pte (GIC), will acquire around 2.6% stake in the bank for Rs 1,296 crore.

Heliconia will subscribe to a preferential issue of 20 million equity shares of Kotak Mahindra Bank at Rs 648 per share. The preferential issue is subject to shareholder and other necessary regulatory approval.

Kotak Investment Banking acted as the exclusive financial advisor to the transaction.

GIC is a global investment management company, which was incorporated in 1981 to manage Singapore's foreign reserves.

"With delight we welcome a reputed and large global financial institution of the stature of GIC as our shareholder. Their investment in the bank underscores the strong fundamentals of our institution," Jaimin Bhatt, president and group chief financial officer at Kotak Mahindra Bank, said in a statement.

The transaction will strengthen the bank's tier I capital and aid in financing its expansion plans. The consolidated net worth of Kotak Group at the end of December 31, 2012 was estimated at Rs 14,568 crore. The bank's standalone capital adequacy ratio was 15.6% while its tier I ratio was 14.2%.

The move will also help promoters of Kotak Mahindra Bank in reducing their stake in the bank.

The Reserve Bank of India (RBI) has allowed Kotak Mahindra Bank time till March, 2018 to reduce the promoters' shareholding in the bank to 20%. Promoters held 45.11% stake in Kotak Mahindra Bank at the end of December, 2012.