Banking and financial services company Kotak Mahindra Bank on Tuesday said it will sell about 8.57% stake held in Airtel Payments Bank (APBL) for Rs 294.8 crore ($40 million) to Bharti Enterprises Ltd.
The shares were acquired in tranches during the calendar years 2016 and 2017 for Rs 200 crore.
The sale is expected to be completed by September 15 or before, the bank said in a regulatory filing.
Kotak Mahindra had picked up a 19.9% stake in payments APBL while Sunil Mittal-led Bharti initially held an 80.1% equity stake.
Bharti had invested through compulsorily convertible preference shares. Overall, Bharti invested Rs 805 crore through equity shares and Rs 919 crore through convertible preference shares.
The investments from Bharti had diluted Kotak Mahindra’s equity stake in the payments bank.
Kotak Mahindra Bank and the parent of telecom operator Bharti Airtel Ltd had teamed up in 2016 for the payments bank.
The company’s revenue stood at Rs 627.19 crore in FY 20 from Rs 474.36 crore in the previous year.
Kotak Mahindra Bank said it does require any governmental or regulatory approvals for the proposed transaction.
The acquirer Bharti Enterprises Limited has received ‘No Objection’ from the Reserve Bank of India (RBI) to enable the execution of the proposed transaction.
RBI had issued 11 payment bank licenses in 2015, out of these only 6 players are operating currently.
Many challenges like razor-thin margins, limited revenue streams and challenging business models forced many players to surrender their licenses.
Aditya Birla, Cholamandalam Distribution Services and Tech Mahindra have surrendered their payments banking licenses.
Currently, there are 6 payment banks operating in the space, India Post, Fino, Paytm, Reliance led Jio and NSDL and Airtel Payments Bank.