Warburg sells 3.6% stake in Kotak Mahindra

Private equity investor Warburg Pincus LLC on Monday sold its remaining 3.6% stake in Kotak Mahindra Bank to raise about Rs 1,400 crore, two sources with direct knowledge of the matter said.

The stake sale, the latest among a slew of such deals this year on the back of a surge in the Indian stock markets, marks the exit of Warburg Pincus from Kotak Mahindra Bank where it first invested in 2004.

The BSE Sensex is up 11% so far this year, mainly led by financial stocks, after having fallen nearly 25% in 2011 that forced many companies to shelve their share sale plans.

About 26.5 million shares of Kotak Mahindra Bank were traded at Rs 530 each in a block deal on the Bombay Stock Exchange on Monday, exchange data showed earlier.

Warburg Pincus and Kotak Mahindra Bank did not immediately respond to Reuters mails for comment.

The private equity investor, which owned about 44 million Kotak Mahindra shares as on end-December, sold about 17.5 million shares in the bank via stock market deals on February 1 to raise about $170 million.

Shares in Kotak Mahindra Bank, which the market values at $7.6 billion, were trading up 2.1% at Rs 536.45 by 1:51 p.m., while the broader Mumbai market was down 1.4%.

Besides Warburg Pincus, investors including Carlyle Group, Temasek Holdings and Khazanah have taken advantage of India's recent market gains to pare stakes in financial companies in deals worth more than $800 million.

Separately, Citigroup Inc <C.N> sold its 9.9% stake in Housing Development Finance Corp for $1.9 billion last month in the one of the biggest equities deal in the country this year.

Buyout firms that invested billions of dollars during the Indian market's boom years before the global financial crisis are widely expected to look for opportunities to cash in their holdings, with more stake sales anticipated in coming months.

More than $5 billion has already been raised in domestic share sales so far this year, compared with roughly $9 billion raised in all of 2011 from 84 issues, Thomson Reuters data showed.