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Kotak sells $338 mn stake to CDPQ, CPPIB

08 March, 2017

Billionaire Uday Kotak has sold about a 1.5% stake in Kotak Mahindra Bank Ltd to Caisse de Depot et Placement du Quebec (CDPQ) and CPP Investment Board (CPPIB) for about Rs 2,254 crore ($338 million).

Kotak, vice chairman and managing director at the bank, sold 27.6 million shares to the two Canadian firms at Rs 817 apiece, stock-exchange data showed on Wednesday.

Shares of Kotak Mahindra Bank gained 0.9% to close at Rs 824.50 apiece in a Mumbai market that fell 0.34%.

The stake sale comes after the Reserve Bank of India, on 1 February, said Kotak Mahindra Bank had time till 30 June 2017 to bring down its promoter shareholding to 30%.

Uday Kotak and other promoters held a 33.61% stake in the bank at the end of December 2016. This means they still need to sell a little more than 2% to meet RBI guidelines.

The RBI has also mandated that the promoter shareholding in Kotak Mahindra Bank should be lowered to 20% by 31 December 2018 and to 15% by 31 March 2020.

For CDPQ, which has so far backed Indian logistics and renewable energy companies, the investment in Kotak Mahindra Bank may be its first direct exposure to the Indian financial services industry. The firm picked up a 1% stake in Kotak Mahindra Bank for Rs 1,503.2 crore on Wednesday.

CPPIB, previously called Canadian Pension Plan Investment Board, has been seeking to increase its stake in Kotak Mahindra Bank in recent years and put in another Rs 751.16 crore in the lender on Wednesday.

CPPIB had initially picked up a 1.41% stake in Kotak Mahindra Bank in mid-2013. A year later, the Uday Kotak-led promoter group sold a 3.24% stake in Kotak Mahindra for Rs 2,200 crore to CPPIB after an RBI directive to reduce promoter holding.

The Canadian firm’s stake dropped to 3.91% stake after Kotak Mahindra merged with ING Vysya Bank in November 2014. But it increased its stake in the bank in March last year when it acquired a little less than 1% from Japan’s Sumitomo Mitsui Banking Corporation for Rs 1,151 crore.

As of December 2016, CPPIB had a 5.76% stake in Kotak Mahindra Bank. With the latest transaction, it will add another 0.5% stake in the lender.

Last year, the RBI allowed CPPIB to own more than 5% but less than 10% of Kotak Mahindra, according to a stock-exchange filing by the bank on 30 August.

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Kotak sells $338 mn stake to CDPQ, CPPIB

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