Private sector bank Kotak Mahindra Bank will be raising between ₹7,500 -7,800 crore equity capital by issuing 6.5 crore shares, the lender informed the exchanges.
“... the board has accorded its approval for raising of capital by way of issue of equity shares, by the bank for up to 6,50,00,000 equity shares of ₹5 each, through a private placement, follow-on public offering (FPO), qualified institutions placement (QIP) or a combination [of both],” the lender said.
“At current market prices, the bank can raise anywhere between ₹7,500 crore and ₹7,800 crore, which will boost its tier-I capital by 300 bps [basis points],” said Rajiv Mehta, an analyst with Yes Securities. “This will also help the bank to fortify its balance sheet to take on any provisioning arising out of the COVID-19 shock.”
The fund raising will also help the bank’s promoter Uday Kotak to reduce his stake. According to the plan approved by the Reserve bank of India, Mr. Kotak has to reduce his stake to 26% from 29.9% by September 30. The fund raising will help Mr. Kotak to dilute stake by 1%.
“With the current dilution of 6.5 crore shares, promoter’s stake will come down to 29%. He is holding 57 crore shares in the company. The overall share capital is 192 crore. So, 6.5 crore shares will only be a dilution of 1%,” Mr. Mehta said.
