HYDERABAD: Kotak Mahindra Bank on Wednesday said its board has approved a proposal to issue 65 million equity shares of Rs 5 each effectively helping the lender raise up to Rs 7,500 crore. The move comes just days after the bank said its board would consider capital raise either through private placement, follow-on public offering (FPO), Qualified Institutional Placement or a combination thereof.
“The board has accorded its approval for raising of capital by way of issue of equity shares, by the bank for up to 65 million equity shares of Rs 5 each, through a private placement, follow-on public offering (FPO), qualified institutional placement (QIP) or a combination thereof, as may be considered appropriate, subject to shareholders’ approval and governmental, regulatory, statutory approvals and requirements, as applicable,” Kotak said in a disclosure with bourses
According to analysts, the proposed capital raise could help the bank dilution up to 3.4 per cent promoter stake to comply with the RBI guidelines. In January, the private lender had reached a settlement with RBI on the issue of diluting promoter stake, where the bank was allowed to dilute promoter stake to 26 per cent by the end of June as against the earlier cut off to reduce stake to 15 per cent of the paid-up capital by March. The promoters agreed to cap their voting rights in the bank at 20 per cent of the paid-up voting equity share capital.
On a standalone basis, the lender had a capital adequacy ratio of 18.2 per cent with tier 1 capital at 17.7 per cent at the end of December, 2019 as agains the regulatory requirement of 11.07 per cent.