Kotak Bank proposes public issue

Kotak Mahindra Bank today announced its plans for a domestic or overseas issue of 15 million equity shares. At Kotak Bank's closing price of Rs 204.20 on the Bombay Stock Exchange today, the issue size is expected to be over Rs 300 crore.

The paid up capital of the new generation private sector bank increased from Rs 123.32 crore to over Rs 300 crore following a bonus issue of shares in the ratio of three shares for every two shares in June 2005.

The proposed issue constitutes about 5 per cent of the current paid-up capital of Rs 308 crore. The promoters' stake in the bank will proportionately fall from the current level of 58.75 per cent after the issue.

The bank, in a statement, said the board of directors approved a proposal to issue up to 15 million equity shares either in the domestic or international market, subject to necessary regulatory and statutory approvals. The actual timing, quantum, price and other terms and conditions of the proposed issue shall be decided by the board.

Uday Kodak, executive vice chairman and managing director, Kotak Mahindra Bank, said "We at Kotak Mahindra Bank are committed to building a world class Indian financial institution. Raising capital is part of our plan to fund the bank's expansion strategy."

The proposed issue of capital will help in improving the capital adequacy of the bank and would enable it to go for higher growth. The capital adequacy of the bank as on June 30 was 12.52 per cent. The minimum capital adequacy prescribed by RBI in the licensing agreement for the bank is 10 per cent.

The shareholding pattern of the bank is as follows: promoters hold 58.75 per cent, FIIs 21.56 per cent, mutual funds 2.47 per cent, banks/FIs/insurance companies 0.02 per cent, Indian public 14.58 per cent, NRIs/OCBs 1.46 per cent, private corporates 1.14 per cent and clearing members hold 0.02 per cent.

The RBI has also stipulated that all banking entities should have a net worth of Rs 300 crore. Kotak Bank and Yes Bank are the latest entrants in the Indian banking space.

The Ashok Kapur-Rabobank promoted Yes Bank in June raised Rs 315 crore through an initial public offer (IPO) at Rs 45 per share, which constituted 25.93 pr cent of the post issue paid-up capital of the bank.