Private sector lender Kotak Mahindra Bank Ltd. on Tuesday launched its over Rs 7,000-crore qualified institutional placement of shares.
The bank's board approved a floor price of Rs 1,147.75 per share for the sale as against Tuesday's closing price of Rs 1,152.45 apiece as per the laid out formula, according to regulatory filings.
The share sale through the QIP route will help the bank's promoter group led by Uday Kotak decrease their stake in the bank by 3.4%, and help comply with the Reserve Bank of India's order to have the holding down to 26% by August this year, as against 29.9% as of March.
In the notification, the bank said it can consider offering a discount of not more than 5% on the floor price so calculated for the issue and the same will be decided by the board's issuance committee on Friday.
After applying the 5% discount, and assuming it sells all the 6.5 crore shares as announced on April 22, the total issue size will come up to Rs 7,087 crore.
The bank's capital adequacy ratio stood at 17.9% with the core equity at 17.45%.
Uday Kotak had said on May 13 that the bank was working on various fronts to get the promoter shareholding to the desired level. He also said the lender wants to be ready with money for a possible opportunity of consolidation in the financial services space.
The RBI, which insists that promoter holdings be at 15% for private sector lenders, had agreed to let Kotak Mahindra Bank's promoters keep their holding at 26% till August but capped their voting rights at 15% to limit their influence on decision-making.
The bank in December 2018 dragged the RBI to the Bombay High Court, after one of its earlier attempts to reduce promoter ownership through a complex debt instrument did not make the cut with the RBI. The case was withdrawn after the lender's suggestions to the RBI were approved in February this year.
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