Warburg Pincus Cuts Kotak Mahindra Bank Exposure; Pockets $73M

By Madhav A Chanchani

  • 17 Oct 2011

Private equity major Warburg Pincus has cut more stake in private sector lender Kotak Mahindra Bank Ltd, selling a little over 1 per cent in the market for Rs 356.25 crore ($73 million) on Friday. The PE firm sold the shares on the National Stock Exchange through two of its entities, Madison and Melany Holdings.

The shares were sold by the PE firm for Rs 475 a unit, around the same price as the earlier sales. Warburg had earlier sold 2.28 per cent in June and July for Rs 768 crore in the company. The latest round of share sale came as the stock markets recovered last week.

Warburg Pincus held 9.28 per cent stake in Kotak Mahindra as of March, 2011, and has now reduced its holdings to less than 6 per cent. The PE firm had first invested in the bank way back in 2004.


Warburg Pincus, which has more than $30 billion in assets under management globally, 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 shares.

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 Bank had reported 27 per cent growth in consolidated net profit to Rs 416 crore in the Q1FY12 results, with its net interest income (NII) growing at the same rate to Rs 920 crore.

Kotak Mahindra is a new-generation financial services group which got the licence for banking business from the Reserve Bank of India in February 2003. Incidentally, 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 is reportedly targeting to raise $12 billion for a new fund, has been a fairly prolific deal-maker over last 15-18 months, committing over $500 million across half-a-dozen companies. On the other hand, the company has also been exiting quite a few of its older portfolio companies over the last 12 months.

The PE firm has in the last few months completely exited DB Corp and Max Healthcare, while it has made partial exits from Max India and Kotak Mahindra Bank. The private equity firm also completely exited Amtek India and Vaibhav Gems earlier this year.

Recently NYSE-listed outsourcing firm WNS Holdings filed a shelf registration in which Warburg is looking to offload its entire 47 per cent stake. Also, earlier this year coal beneficiation and power generation firm ACB (India) had filed for an IPO in which the PE major plans to part exit.


Share article on