Kotak Mahindra Bank on Tuesday launched a qualified institutional placement (QIP) issue that will see the bank raise up to Rs 7,500 crore. The private sector lender has a fixed a floor price of Rs 1,147.75 per share for the offering.
The share sale will result in bringing down promoter Uday Kotak’s stake to 28.94 per cent from 29.91 per cent.
The issuance committee of the bank's board met on Tuesday and agreed to the opening up of the placement on Tuesday, while approving the preliminary placement document as well as the floor price based on a formula under Sebi ICDR (Issue of Capital and Disclosure Requirement) Regulations.
The floor price marks a discount of 0.40 per cent to the closing price of the Kotak Mahindra Bank share on the bourses on Tuesday. On the BSE, the stock settled at Rs 1,152.45, lower by 0.67 per cent over the previous close.
Kotak Mahindra Bank said in the offer document that it intended to use the net proceeds to augment its capital base and to strengthen its balance sheet, which would assist the bank in dealing with contingencies or financing business opportunities, or both, that may arise due to the economic events driven by the outbreak of Covid-19.
The QIP offering is also a step towards bringing down the promoter stake in line with an agreement with the Reserve Bank of India (RBI). The RBI in February had given its final approval to the bank’s proposal to lower the stake. The promoters are required to bring down their holdings to 26 per cent of their `paid-up voting equity share capital by August 17 this year.
Last month, the board had approved the capital raising through the issuance of 6.5 crore shares, which was later approved by its shareholders.
Vedanta moves shareholders
Billionaire Anil Agarwal-controlled Vedanta Ltd on Tuesday began the process of seeking shareholders nod to delist the company.
The firm through a postal ballot sought shareholders nod to delist after Agarwal’s Vedanta Resources Ltd offered to buy out about 49.9 per cent of public shareholding at a price of Rs 87.5 per share. The proposal needs to be approved by at least 66.7 per cent of minority shareholders. Shareholders can cast their votes between May 26 and June 24.
The bank said in the offer document that if it issues additional equity shares after the completion of QIP, shareholding of the investors will be diluted. The promoters are also reportedly weighing the possibility of selling some of their stake to meet the shareholding requirement.
For the year ended March 31, 2020, the bank had a strong capital adequacy ratio of 17.9 per cent. The QIP comes amid concerns of higher provisions on account of rising bad loans because of the pandemic.
The lender said in the document 26.2 per cent by value of borrowers of the bank (as of March 1, 2020) had availed themselves of the moratorium prescribed by the RBI in the first round. It added that for this fiscal, it has recognised a general provision for Covid-19 deferment cases amounting to Rs 650 crore.
'The RBI has further permitted the extension of the moratorium period by another three months to August 31, 2020. As of the date of this preliminary placement document, the impact of such extension is difficult to ascertain, as we may permit customers moratorium beyond May 31, 2020, which may require us to make higher provisions and impact our overall profitability and growth’’, the bank said.
Vedanta seeks nod
Billionaire Anil Agarwal-controlled Vedanta Ltd on Tuesday began the process of seeking shareholders nod for delisting the company. The firm through a postal ballot sought shareholders nod to delist after Agarwal's Vedanta Resources Ltd offered to buyout about 49.9 per cent of public shareholding at a price of Rs 87.5 per share, it said in a regulatory filing. The proposal needs to be approved by at least 66.7 per cent of minority shareholders
Vedanta said shareholders can cast their votes between May 26 and June 24.
