<ul><li><keyword id="46013" type="CITY" weightage="20" keywordseo="Kotak-Mahindra-Bank">Kotak Mahindra Bank</keyword>’s share price is up by more than 10% today morning after it posted its earnings yesterday. </li><li>Analysts are optimistic that the bank’s asset quality and decline in provisioning expenses will help it ride through the next year.</li><li>Kotak Mahindra Bank may also possibly be included in the <keyword id="48670" type="CITY" weightage="20" keywordseo="Morgan-Stanley">Morgan Stanley</keyword> Capital Investment (MSCI) Global Indices as the latter revises its foreign ownership limits (FOL). </li></ul>Kotak Mahindra Bank’s share price has skyrocketed by 10% on the back of bullish commentary and target upgrades from brokerages. The bank posted a profit of 27% in the second quarter and its net interest income grew by 17%. <div type="image" title="Copy of KMB1" msid="78887422" hostid="261" caption="&amp;lt;p&amp;gt;Kotak Mahindra Bank&amp;#39;s stock over the last one month&amp;lt;/p&amp;gt;"></div> “We increase our FY21 and FY22 earnings by 27% and 20% (respectively), aided by steady revenues and sharp decline in provisioning expenses,” said brokerage Motilal Oswal in its report. It upgraded its rating of Kotak Mahindra bank to ‘buy’, following a gap of 10 quarters. <div type="Article" hostid="261" msid="78869757" title="Kotak Mahindra Bank still on ‘alert’ as profit improves 27% over the last three months" mstype="2" mssubtype="0"></div> Potential MSCI inclusion boost Kotak Mahindra Bank may also possibly be included in the Morgan Stanley Capital Investment (MSCI) Global Indices as it revises its foreign ownership limits (FOL). This comes after Foreign Portfolio Investor (FPI) limits for Indian companies were relaxed to the sectoral limit. “Stocks that are being included tend to outperform in the run-up in their inclusion in key indices. Further, we observe that MSCI India index tends to outperform before and post the announcement,” the Morgan Stanley report said. It expects MSCI India to see passive inflows of $2.5 billion on the back of this move. Even though Kotak Mahindra Bank’s stock is up nearly 25% over the last one month, it still has to recuperate from the impact of COVID-19. As compared to January — before Prime Minister Narendra Modi announced a nation-wide lockdown to prevent the pandemic from spreading — the share price is down over 5%. <div type="image" title="KMB1" msid="78887454" hostid="261" caption="&amp;lt;p&amp;gt;Kotak Mahindra Bank&amp;#39;s share price since January&amp;lt;/p&amp;gt;"></div> Brokerages bullish post Q2 earnings “With a strong liability franchise in place, high capital and steady asset quality keeps our view constructive, although balance on loan growth has to improve from here on,” Prabhudas Lilladher analysts said in a note. <table style="border-width: initial; border-style: none; width: 468pt; table-layout: fixed;"><colgroup></colgroup><col /><col /><tbody><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Brokerages on Kotak Mahindra Bank </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Target Price </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Motilal Oswal </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹ 1,650 </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">ICICI Securities </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹ 1,634 </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Prabhudas Lilladher </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹ 1,503 </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">YES Securities </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹ 1,6870 </td></tr></tbody></table> SEE ALSO: <a href="https://www.businessinsider.in/science/space/news/china-launches-three-new-spy-satellites-amid-border-dispute-with-india-and-tensions-in-the-south-china-sea/articleshow/78886330.cms">China launches three new spy satellites amid border dispute with India and tensions in the South China Sea</a> <a href="https://www.businessinsider.in/business/corporates/news/hcl-tech-is-looking-to-expand-operations-in-canada-if-h-1b-visa-issues-persist/articleshow/78884838.cms">EXCLUSIVE: HCL Tech is expanding operations in Canada as H-1B visa issues persist</a> <a href="https://www.businessinsider.in/finance/banks/news/kotak-mahindra-bank-q2-results-show-profit-up-by-27/articleshow/78869757.cms">Kotak Mahindra Bank still on ‘alert’ as profit improves 27% over the last three months</a>

Kotak Mahindra Bank surges 10% on earnings upgrades and potential MSCI inclusion

<ul><li><keyword id="46013" type="CITY" weightage="20" keywordseo="Kotak-Mahindra-Bank">Kotak Mahindra Bank</keyword> reported an yearly improvement in profit of 27% and income growth of 17% in the second quarter. </li><li>The bank is on ‘alert’ as it recovers from the impact of COVID-19 on its balance sheets.</li><li>The bank has not recognised any non-performing assets (NPA) since August 31, adhering to the Supreme Court’s order. If not for that, its gross non-performing assets (GNPA) would have been at 2.07% and net non-performing assets (NNPA) would have been at 0.74%.</li></ul>Kotak Mahindra Bank (KMB) is still on ‘alert’ as it recovers from the COVID-19 impact. In the three months from July to September, its profit increased by 27%, and net interest income (NII) has grown by 17% compared to the same period last year. The numbers have come in a day after a news report indicated that KMB is eyeing a merger with <keyword id="46717" type="CITY" weightage="20" keywordseo="IndusInd-Bank">IndusInd Bank</keyword>, even as <a href="https://www.businessinsider.in/finance/banks/news/indusind-bank-shares-rally-4-after-rumours-of-kotak-mahindra-bank-merger/articleshow/78867706.cms">spokespersons</a> of both financial institutions have denied this. <div type="Article" hostid="261" msid="78867706" title="IndusInd Bank shares rally 4% after promoters refute reports of merger with Kotak Mahindra Bank" mstype="2" mssubtype="0"></div> Even after earnings, the bank’s shares continue to flat in the stock market, marginally in the red. <div type="image" title="Kotak Mahindra Bank share price" msid="78869847" hostid="261" caption="&amp;lt;p&amp;gt;Kotak Mahindra Bank share price since 1 July 2020&amp;lt;/p&amp;gt;"></div> Impact of compound interest waiver for moratorium loans The bank is yet to address the impact of compound interest waiver for loans under moratorium. At the end of the first quarter, KMB had 10% of its total portfolio opting for the moratorium, which is considerably lower than other banks — except HDFC Bank. The bank has not recognised any non-performing assets (NPA) since August 31, adhering to the Supreme Court’s order. If not for that, its gross non-performing assets (GNPA) would have been at 2.07% and net non-performing assets (NNPA) would have been at 0.74%. “As a matter of prudence, the bank has made additional provisions (including on interest accrued) of ₹92 crore on such advances,” it said its filing. Kotak Mahindra Bank: Asset Quality <table style="border-width: initial; border-style: none; width: 468pt; table-layout: fixed;"><colgroup></colgroup><col /><col /><tbody><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">GNPA </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">2.55% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">NNPA </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">0.64% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Capital adequacy ratio </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">22% </td></tr></tbody></table>Source: Company filings. GNPA and NNPA as on 30 September 2020. At the end of the second quarter, KMB’s COVID-related provisions stood at ₹ 1,279 crore, accounting for 0.62% of its net advances. Non-specific provisions towards advances — including standard and COVID provisions — is at 177% of the net non-performing assets (NNPA) of the bank. The bank’s CASA ratio has also improved from 53.6% to 57.1% on a yearly basis. According to the bank, high frequency indicators are positive. This includes GST collections, power, petroleum and other sectors. Increased government spending and the Monetary Policy Committee’s (MPC) accommodative stance were also commended. Considering the slow down in retail loans, KMB is looking to open up select segments for credit growth — home loans and high quality corporates in particular. According to the bank, rural and semi-urban India shows promise. This is reflected by the recovery of India’s infrastructure sector, which surprised everyone, including one of India’s richest men — <a href="https://www.businessinsider.in/business/corporates/news/kumar-mangalam-birla-says-cement-industry-is-recovering-and-analysts-find-evidence-of-it-outside-ultratech-too/articleshow/78791281.cms">Kumar Mangalam Birla. </a> Updated: Correction made. Kotak Mahindra Bank's gross non-performing assets (GNPA) would have been at 2.07% not 5.07% SEE ALSO: <a href="https://www.businessinsider.in/finance/banks/news/indusind-bank-shares-rally-4-after-rumours-of-kotak-mahindra-bank-merger/articleshow/78867706.cms">IndusInd Bank shares rally 4% after promoters refute reports of merger with Kotak Mahindra Bank</a> <a href="https://www.businessinsider.in/tech/enterprise/news/stack-overflow-ceo-prashanth-chandrasekar-explains-how-stack-overflow-flipped-the-script-on-software-development/articleshow/78854564.cms">EXCLUSIVE: Communities, brand and then product — CEO explains how Stack Overflow flipped the script on software development</a> <a href="https://www.businessinsider.in/india/news/trump-calls-india-china-and-russia-filthy-while-justifying-exit-from-paris-agreement/articleshow/78821267.cms">Trump calls India, China and Russia ‘filthy’ while justifying exit from Paris Agreement</a>

Kotak Mahindra Bank still on ‘alert’ as profit improves 27% over the last three months

New Delhi, Dec 17 () Shares of Yes Bank on Tuesday gained nearly 2 per cent in-line with a broader market trend, registering its fourth consecutive day of rally.
 The scrip jumped 1.71 per cent to close at Rs 47.60 on the BSE. During the day, it went up by 2.88 per cent to Rs 48.15.
 On the NSE, it rose 1.81 per cent to close at Rs 47.65.
 In fours days, the scrip has gained over 11 per cent.
 On traded volume front, 71.01 lakh shares of the company were traded on the BSE and over 13 crore shares on the NSE during the day.
 Market benchmarks Sensex and Nifty soared to new peaks on Tuesday. The 30-share BSE barometer settled 413.45 points, or 1.01 per cent, higher at its all-time high of 41,352.17. Similarly, the broader NSE Nifty rallied 111.05 points, or 0.92 per cent, to its record closing high of 12,165.
 Meanwhile, two of India's top bankers on Tuesday opined that Kotak Mahindra Bank (KMB) is best suited to acquire smaller and capital-starved rival Yes Bank.
 "I think Uday (Kotak) is the best candidate to acquire Yes Bank. You need deep pockets, Uday has that," SBI Chairman Rajnish Kumar said at Times Network's India Economic Conclave in Mumbai.
 When the same question was posed to third-largest lender Axis Bank's Managing Director and CEO Amitabh Chaudhry, it was answered with the same suggestion.
 "We (Axis Bank) are a smaller bank. We are trying to ensure that we grow big so that at some stage we can acquire others. So, yes Kotak, they are best suited rather than us," he said.
 Yes Bank's share price plummeted to Rs 32 apiece in October as against a high of Rs 400 just a year ago and has been one of the most volatile scrips on the bourses.
 The company's capital buffers have dipped on accelerated non-performing assets recognition under new chief executive Ravneet Gill earlier this year.
 The private sector lender's capital raising plan is also passing through uncertainties and there are speculations on whether Yes Bank is an acquisition target, which has been denied by its management. SUM SHW
SHW

Yes Bank shares continue to gain; up nearly 2 pc

Mumbai, May 31 () Private sector lender Kotak Mahindra Bank (KMB) has raised Rs 7,442.5 crore through a qualified institutional placement (QIP) of shares. The bank on Saturday issued 6.5 crore shares at a price of Rs 1,145 per share to the buyers to raise the money which will buffer its capital reserves, it said in a regulatory filing. Entities who bought the shares include Invesco Oppenheimer Developing Markets Fund, which bought 52.16 lakh shares or over 8 per cent of the issue size, Canada Pension Plan Investment Board (46.25 lakh shares or 7.12 per cent of the issue) and 40.96 lakh shares or 6.30 per cent of the issue by ICICI Prudential Mutual Fund through 18 schemes, the bank said. The issue price decided by a board committee late on Friday evening was 6.43 per cent below Friday's close of Rs 1,223.70 and a notch below the formula arrived floor price of Rs 1,147.75. The share sale, which will aid the promoter group led by its Managing Director Uday Kotak reduce its holding, was launched on May 26. The bank's capital adequacy had stood at 17.89 per cent with the core equity at 17.45 per cent as on March 31. According to a report, the promoters are mulling to offload their shares after the close of the QIP. The Kotak family would sell up to 5.7 crore shares, which will fetch around Rs 6,600 crore at current prices, according to the report. As of March 31, the promoter family's holding had stood at over 29 per cent. Kotak had on May 13 said there is a chance of consolidation in the financial services space as well and when an opportunity beckons, the bank wants to be ready with the money. He had also said the bank is working on various fronts to get the promoter shareholding to the desired level mandated by the Reserve Bank of India (RBI). The RBI, which insists on promoter holdings to be at 15 per cent for private sector lenders, had agreed to let KMB's promoters to have their holding at 26 per cent by August but capped their voting rights at 15 per cent to limit their decision-making influence. KMB 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 by KMB after its suggestions to the RBI were approved in February this year. AA HRS

Kotak Mahindra Bank raises Rs 7,442.5 cr via QIP of shares

Mumbai, May 26 () Private sector lender Kotak Mahindra Bank on Tuesday launched its over Rs 7,000-crore qualified institutional placement (QIP) of shares. The bank's board approved a floor price of Rs 1,147.75 per share for the sale as against Tuesday's close 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 per cent, and help comply with the Reserve Bank of India's (RBI) order to have the holding down to 26 per cent by August this year, as against 29.92 per cent as of March. In the notification, the bank said it can consider offering a discount of not more than 5 per cent 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 per cent discount, and assuming it sells all the 6.5 crore shares as announced on April 22, the total issue size will come at Rs 7,087 crore. The bank's capital adequacy ratio came at 17.89 per cent with the core equity at 17.45 per cent. Uday Kotak had on May 13 said there is a chance of consolidation in the financial services space as well and when an opportunity beckons, the bank wants to be ready with the money. He had also said that the bank is working on various fronts to get the promoter shareholding to the desired level. The RBI, which insists on promoter holdings to be at 15 per cent for private sector lenders, had agreed to let KMB's promoters have their holding at 26 per cent by August but capped their voting rights at 15 per cent to limit their decision-making influence. KMB 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 by KMB after its suggestions to the RBI were approved in February this year. AA HRS

Kotak Mahindra Bank launches Rs 7,000-cr share sale through QIP

<ul><li>Analysts believe that a potential acquisition will improve lending capability and expand branch footprint <keyword id="46013" type="General" weightage="80" keywordseo="kotak-mahindra-bank" source="Orion">Kotak Mahindra Bank</keyword>.</li><li>Market unclear on such a large acquisition would play out if it leads to a merger eventually.</li><li>The end game should be full acquisition and amalgamation of <keyword id="6357560" type="General" weightage="80" keywordseo="idbi-bank" source="Orion">IDBI Bank</keyword>.</li></ul> <keyword id="6368369" type="General" weightage="50" keywordseo="life-insurance-corporation-of-india" source="Orion">Life Insurance Corporation of India</keyword> along with the government are looking to divest 60.72% in <keyword id="67881" type="General" weightage="100" keywordseo="idbi" source="Orion">IDBI</keyword> Bank. The process has already been kicked off and this will be a test case for the government as it will give it a blueprint for future divestments. So far media reports have speculated that Kotak Mahindra Bank was in the fray, but now <keyword id="3313307" type="General" weightage="40" keywordseo="nomura-global-markets-research" source="Orion">Nomura Global Markets Research</keyword>, a Japanese investment bank, has come out with a report that projects various scenarios of the potential acquisition and also explains how Kotak Mahindra Bank stands to gain if it acquires the bank. For starters, a possible IDBI acquisition could take KMB’s loan book to Rs 5 trillion plus along with a CASA ratio of 50%, which would be ahead of industry’s. The acquisition would also result in a sharp expansion in its branch footprint. Analysts at <keyword id="6354527" type="General" weightage="80" keywordseo="nomura" source="Orion">Nomura</keyword> believe that the acquisition would enhance its lending capability as the loan to deposit ratio will fall to 78% from 85% in Q1FY24. Analysts at Nomura have painted different scenarios of any potential transaction which will entail acquisition of a 61% stake in IDBI Bank. The first scenario could be a full cash-based transaction while the second would be stock-based and the third could be a hybrid one – entailing cash plus stock. According to the report, “While a cash-based acquisition is strongly EPS and RoE accretive, a stock-based acquisition is BVPS (book value per share) accretive (while being RoE dilutive). In all scenarios, the end-game for KMB should be the full acquisition and amalgamation of IDBI Bank, in our view.” The Japanese investment bank is of the view that scenarios which involve cash are preferable as they would bump-up to RoEs, which are currently depressed due to KMB’s low leverage of ~6x vs 8-9x for large private banks. But this deal may not be without its share of complications, says Nomura. The <keyword id="6354335" type="General" weightage="50" keywordseo="reserve-bank-of-india" source="Orion">Reserve Bank of India</keyword> has incrementally not been forthcoming in terms of allowing banks to pick-up stakes in other BFSI businesses, says the report. Therefore, it is unclear how such a transaction would be allowed. The central bank could make an exception Kotak Mahindra Bank is to be eventually merged with IDBI Bank. A merger also is not without its share of complication, even if it is allowed. There is no certainty on how this can impact the share price of Kotak Mahindra Bank even if the merger leads to better financial ratios.

What if Kotak Mahindra Bank acquires IDBI Bank, asks Nomura

<ul><li>SBI Chairman Rajnish Kumar said that <keyword id="45051" type="PERSON" weightage="20" keywordseo="Uday-Kotak">Uday Kotak</keyword> is best suited to acquire <keyword id="45660" type="DOMAIN" weightage="20" keywordseo="Yes-Bank">Yes Bank</keyword>. </li><li><keyword id="6355975" type="DOMAIN" weightage="20" keywordseo="axis-bank">Axis Bank</keyword>'s Managing Director and CEO Amitabh Chaudhry too suggested that <keyword id="46013" type="COMPANY" weightage="20" keywordseo="Kotak-Mahindra-Bank">Kotak Mahindra Bank</keyword> is the right candidate. </li><li>According to some watchers, acquiring a bank can help Uday Kotak reduce the promoter stake in his bank, and meet RBI guidelines. </li></ul>Two of India's top bankers on Tuesday opined that Kotak Mahindra Bank (KMB) is best suited to acquire smaller and capital-starved rival Yes Bank.
Yes Bank's capital buffers have dipped on accelerated non performing assets recognition under new chief executive Ravneet Gill earlier this year.
 The private sector lender's capital raising plan is also passing through uncertainties and there are speculations on whether Yes Bank is an acquisition target, which has been denied by its management.
 "I think Uday (Kotak) is the best candidate to acquire Yes bank. You need deep pockets, Uday has that," SBI Chairman Rajnish Kumar said at Times Network's India Economic Conclave here.
 When the same question was posed to third-largest lender Axis Bank's Managing Director and CEO Amitabh Chaudhry, it was answered with the same suggestion.
 "We (Axis Bank) are a smaller bank. We are trying to ensure that we grow big so that at some stage we can acquire others. So, yes Mr Kotak, they are best suited rather than us," he said. In the past, both Axis Bank and KMB have been discussed as potential suitors for Yes Bank.
 According to some watchers, acquiring a bank can help Uday Kotak reduce the promoter stake in KMB, and help him get closer to the levels mandated by the RBI.
 The regulator has been dragged to the court by KMB for not accepting an earlier attempt at stake dilution and the same petition is slated to be heard early next year.
 Meanwhile, speaking at the same event, Kotak said there is a need to resist a "colonialisation" of Indian finance, hinting at share sales to foreign investors.
 "I'm looking forward to best in class quality but strong Indian owned and controlled financial sector and while we must attract foreign capital, we must ensure that there is no colonialisation of Indian finance," Kotak said.
 Yes Bank had to cut its book size by 7 per cent in the September quarter because of the capital constraints and has been looking to finish the capital raising exercise at the earliest.
 It had first announced it has interest from investors of USD 3 billion, and a few days later disclosed offers of USD 2 billion. It wanted to finalise the same at the last board meet on December 10 but could not.
 Yes Bank's share price plummeted to Rs 32 apiece in October as against a high of Rs 400 just a year ago, and has been one of the most volatile scrips on the bourses where the price is governed by frequent news flows and speculation.

Uday Kotak has pockets deep enough to acquire Yes Bank, say top bankers

Mumbai, Jun 2 () Billionaire banker Uday Kotak on Tuesday sold 2.83 per cent of the promoter group's holding in private sector lender Kotak Mahindra Bank for Rs 6,944 crore. The share sale, executed through open market trades, will help Kotak comply with the RBI's stake reduction mandate as the promoter group stake will go down to 26.10 per cent, according to an exchange filing. The deal comes within days of the bank raising over Rs 7,400 crore through a qualified institutional placement of shares over the weekend. The promoter holding in the bank had come down by a tad over 1 per cent from 29.8 per cent after the QIP issue. Kotak had reached a settlement with the RBI earlier this year, as part of which the central bank had asked the promoter holding to come down to 26 per cent by August. The shares were sold to marquee investors at the top end of the indicative price band of Rs 1,215-1,240 per share on Tuesday, market sources said. As per the rules, price at which a share sale happens cannot be less than 1 per cent of the previous day's close, which gets the floor price at Rs 1,236, they said, adding that the shares were sold at Rs 1,240, the highest end of the band indicated earlier to investors. Investors who bought the shares include global names like The Regents of the University of California, Oppenheimer Developing Market Fund, J P Morgan Securities, HSBC Global Investment Funds, Fidelity Funds - Emerging Market Fund, Societe Generale, Canada and Morgan Stanley Asia Singapore, among others. Domestic institutions, including SBI Mutual Fund, Aditya Birla Sun Life Mutual Fund, ICICI Prudential Life Insurance Company and Nippon India Mutual Fund also bought the shares, they said. Kotak now has time till mid-August for selling the remaining 0.10 per cent holding in the bank to comply with the RBI mandate. Last month, he had said that the bank is topping up on capital to participate in any opportunities that may come about because of its expectation of consolidation in the sector and also added that he was looking at multiple options to comply with the 26 per cent holding cap. Even though the ownership has been capped at 26 per cent, the RBI has reduced the voting rights of the promoter group at 15 per cent as part of the arrangement reached earlier. In the case of private-sector lenders, RBI mandates the ownership at 15 per cent for promoters to limit their influence in the running of any bank. KMB had tried to reduce the ownership through a complex debt instrument in August 2018, which did not pass the regulatory muster. The bank dragged the regulator to the Bombay High Court in December of that year and withdrew the case in February this year after reaching the settlement. The KMB scrip gained 7.52 per cent to close at Rs 1,343.20 apiece on the BSE on Tuesday, as against gains of Rs 1.57 per cent on the benchmark. AA MR MR MR

Uday Kotak sells 2.83 pc stake in Kotak Mahindra Bank for Rs 6,944 cr

Mumbai, Apr 22 () The board of private sector lender Kotak Mahindra Bank (KMB) on Wednesday approved a proposal to raise capital through issuance of 6.5 crore shares. According to the current price of its shares, sale of 6.5 crore shares will entail raising up to Rs 7,500 crore. The capital raising may help the bank's promoter group led by its chief executive Uday Kotak reduce its holding in the bank to comply with a plan mandated by the Reserve Bank of India (RBI). As part of the bank's plan approved by the RBI, the lender is required to get down the promoters' stake to 26 per cent from the over 30 per cent held as of December 2019. The approval involves sale of 6.50 crore shares of a face value of Rs 5 each either through a private placement of shares, a follow-on public offering (FPO), qualified institutions placement (QIP) or a combination thereof, the bank told stock exchanges. The markets have been very volatile because of the coronavirus pandemic and there are also questions about the long-term economic impact of the pandemic in India, with many analysts predicting a contraction in the economy. In a recent report, global ratings agency Standard &amp; Poor's said Kotak Mahindra Bank can weather the challenges which will be posed by the infections and affirmed its rating on the lender. "The bank will be able to withstand our current expectations of a deterioration in operating conditions over the next 12-24 months. This is due to its above-industry-average risk management, earnings and capitalization buffers, and improving funding profile," the rating agency had said. The bank had last raised core capital in 2017, when it raised Rs 5,800 crore through the QIP route. Its shares were trading 1.86 per cent up at Rs 1,151.50 apiece on the BSE at 1315 hrs. AA HRS

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