Kotak Mahindra Bank to raise Rs 5,400 crore of equity : 31 Mar 2017

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Kotak Mahindra Bank on Thursday said it has received board approval to raise equity capital by issuing up to 62 million shares, which, according to the closing price of Rs 865 a share on Thursday on the BSE, amounted to Rs 5,363 crore.

The face value of the share would be Rs 5 each.

The bank could raise the fund through any means the board decides appropriate, including 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 of these options.

The Reserve Bank of India (RBI) had issued a directive that Kotak Mahindra Bank Executive Vice-Chairman Uday Kotak would need to reduce his stake in the bank to 30 per cent by June 2017 and to 20 per cent by December 2018. Earlier this month, Kotak had sold 27.6 million shares, reducing his stake in the bank from 33.3 per cent to 31.8 per cent. If the company raises the entire proposed amount, his stake would fall further to around 31 percent.

The proposed capital dilution works out to 3.37 per cent on the current equity base.

After the capital raising, the bank’s capital adequacy ratio would rise to about 20 per cent, said Jaimin Bhatt, president and group CFO, Kotak Mahindra Bank. Its capital adequacy ratio was 18 per cent at the consolidated level in the December 2016 quarter.

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