Kotak Mahindra Bank Surges Over Report That Berkshire May Invest

Shares of Kotak Mahindra Bank posted their sharpest surge in nearly nine years on Friday following a report that billionaire investor Warren Buffett's Berkshire Hathaway Inc is planning to pick up a 10 per cent stake in the bank. Kotak Mahindra Bank denied the report in a regulatory filing, by saying it is “unaware of any plans by Berkshire Hathaway buying stake in the bank”. The private sector bank also said it has “nothing to report to the exchanges" on the said report.

US-based Berkshire Hathaway may invest between $4 billion and $6 billion in the lender by buying promoter stake or through a preferential allotment, television channel CNBC-TV18 had reported, citing sources.

Uday Kotak, the billionaire head of Kotak Mahindra Bank, has been asked by the Reserve Bank of India (RBI) to lower his holding in the bank to 20 per cent by the end of this year, and to 15 per cent by March 31, 2020.

In August, the central bank said the CEO's plan to reduce his stake by issuing non-convertible perpetual non-cumulative preference shares does not meet their promoter holding dilution requirement.

Uday Kotak directly held a 29.73 per cent stake in the lender as of September 30, 2018, according to data on the Bombay Stock Exchange.

Kotak shares rose as much as 14 per cent to Rs 1,345.950 their highest since September 3. This was the stock's sharpest intraday gain since February 2010.

Berkshire Hathaway was not immediately available to comment on the matter.

At 2:01 pm, Kotak Mahindra Bank shares were trading 6 per cent higher at Rs 1,251 apiece on the NSE, whose benchmark index, Nifty, was up 0.4 per cent.

(With inputs from Reuters)