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Canadian pension funds buy 1.5% stake in Kotak Mahindra Bank

LiveMint logoLiveMint 08-03-2017 Deborshi Chaki

Mumbai: Kotak Mahindra Bank Ltd on Wednesday said Canadian pensions funds Canada Pension Plan Investment Board (CPPIB) and Caisse de Depot Quebec (CDPQ) have bought a 1.5% stake in the bank from Uday Kotak, its executive vice-chairman and managing director.

According to stock exchange data, CPPIB and CDPQ have bought 9.2 million and 18.4 million shares, respectively, in bulk deals, amounting to Rs2,254 crore.

This follows the Reserve Bank of India’s (RBI) recent directive to Uday Kotak to cut his stake to 30% by June end.

Kotak, who founded the lender in 2003, will have to trim the stake to 20% by the end of 2018 and 15% by the end of March 2020, according to a February exchange filing.

Uday Kotak is India’s eighth richest person worth $8.2 billion, according to the Bloomberg Billionaires Index.

CPPIB is an existing shareholder of Kotak Mahindra and had received RBI’s approval for acquiring shares in excess of 5% and below 10% of the paid-up capital of the bank in August last year.

With the latest transaction, it owns a 6.26% stake.

Bloomberg reported this week that Uday Kotak is in discussions sell more than a 3% stake to first-time investor CDPQ, Canada’s second largest pension fund.

Other investors are also competing for the stake, the Bloomberg report said, citing unnamed people close to the transaction.

On Wednesday, the board of directors of Kotak Mahindra Bank also approved, subject to statutory and regulatory approvals, an increase in ceiling limit for investment by foreign institutional investors, foreign portfolio investors, qualified foreign investors, non-resident Indians and people of Indian origin in the equity share capital of the bank, from 40% to 42%. Shares of Kotak Mahindra Bank closed at Rs824.5 on BSE, up by 0.88%, while the benchmark Sensex closed at 28,901.94 points, down by 0.34%.

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