The board of directors of Kotak Mahindra Bank has affirmed the bank’s plan to raise equity capital to the extent of 62 million shares of Rs 5 each of face value . At the present market cost of Rs 866 at around 1.00 pm on Thursday, the aggregate sum works out to Rs 5,370 crore.
The said funds may be raised through a rights issue, private placement, follow-on public offering (FPO), qualified institutional placement (QIP), Global Depository Receipts (GDR), American Depository Receipts (ADR) or through any other permissible mode or a combination thereof, which the board decides is appropriate.
The Reserve Bank of India had issued an order that the bank’s promoters (Kotak family, drove by Executive Vice-Chairman Uday Kotak) would need to diminish their stake in the bank to 30 percent by June 2017 and to 20 percent by December 2018.
As on December 31, 2016, promoters’ stake in the bank was nearly 33.61 per cent. The proposed capital dilution works out to about 3.26 per cent on the expanded equity base.
A declaration issued by the bank to the stock trades expressed that the value stores raised by the bank would be sent towards towards pursing consolidation opportunities in the Indian banking and financial services sector or capitalisation of chances accessible in securing and determination of focused on resources in the saving money area, incorporating investment in the ‘bad bank’ plan now widely talked about in the banking channel.
The funds may also be deployed towards supplementing additional avenues of organic growth for the bank such as opportunities in digital expansion, domestic and international lending and so on. The capital raised may also be deployed towards growth of the bank’s subsidiaries, the statement added.