Kotak launches $1 bn QIP, will issue 65 mn new shares for Rs 1,147.75 each

The bank has the discretion to offer up to 5% discount on floor price to investors participating in the QIP programme

Kotak Mahindra Bank on Tuesday launched its qualified institutional placement (QIP) programme to raise Rs 7,460 crore (nearly $1 billion). The private sector lender will issue 65 million fresh shares at a floor price of Rs 1,147.75 apiece.

The bank has the discretion to offer up to 5 per cent discount on the floor price to investors participating in the QIP programme. The issue price and the list of investors will be finalised by the bank’s issuance committee of the board on May 29.

The QIP will lead to 3.4 per cent dilution in the bank’s equity base. Following the fund-raising, the promoter shareholding in the bank will fall by 98 basis points from 29.92 per cent at present to 28.94 per cent.

 

The private lender had said last month that the proposed issuance would augment its capital base, strengthen its balance sheet, and help in dealing with contingencies or financing both organic and inorganic business opportunities, which may arise after the Covid outbreak.

In February, the Reserve Bank of India (RBI) had given final approval to the bank’s proposal on promoters’ stake reduction and capping voting rights in the bank. The RBI had conveyed to the bank that its promoters led by managing director and CEO Uday Kotak would have to bring down their shareholding to 26 per cent of the paid-up voting equity share capital by August 2020. Also, promoters would have 20 per cent of the paid-up voting equity share capital until March 31, 2020, and it would be brought down to 15 per cent from April 1, 2020.

Shares of Kotak Mahindra Bank closed at Rs 1,152.5, down 0.7 per cent on Tuesday.

Disclosure: Entities controlled by the Kotak family have a significant holding in Business Standard Pvt Ltd.