Private equity major Warburg Pincus has completed its exit from private sector lender Kotak Mahindra Bank Ltd, garnering over Rs 3,400 crore ( $661 million) in the process started over nine months ago. In the recent stake sale, two of its entities sold nearly 3.6 per cent stake on the Bombay Stock Exchange for over Rs 1,406 crore ($273 million). Warburg Pincus held 9.28 per cent stake in Kotak Mahindra before it started exiting in June 2011.
The deal would mark the largest exit by Warburg Pincus after India’s biggest mobile operator Bharti Airtel, where it encashed $1.83 billion on its original $290 million investment.
The shares were sold by Madison and Melany Holdings at a share price of Rs 530 per scrip. The share price of Kotak Mahindra has peaked over the last two months, reaching a high of Rs 589 per share. Most of the shares were picked up by Genesis Emerging Markets Investment Company.
Kotak Mahindra Bank is a new-generation entity which got the licence for banking business from the Reserve Bank of India in February, 2003. In fact, Kotak Mahindra Finance Ltd became the first NBFC to be converted into a bank. Another player which got banking approval at the same time was Yes Bank, which also gave multi-bagger returns to its early PE investors like ChrysCapital, Citi Venture Capital and AIF Capital.
Warburg Pincus, which has more than $30 billion in assets under management, had initially picked up 2.75 per cent stake in Kotak Mahindra Bank in late 2004 for Rs 75.9 crore, through a fresh issue of
share. And it continued to acquire shares in the bank through market transactions as the Uday Kotak-led promoter group was shedding its stake to meet RBI norms. Warburg Pincus also got RBI permission in
2005 to increase its stake in the bank up to 10 per cent.
Kotak Mahindra reported a 21 per cent YoY increase in consolidated PAT at Rs 463 crore for Q3FY11 with net interest income (NII) growing 21.3 per cent YoY to Rs 651.5 crore.