InvestorQ : Why is Kotak Mahindra Bank planning such a large QIP placement in the market?
Priyanka N made post

Why is Kotak Mahindra Bank planning such a large QIP placement in the market?

Answer
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NISHA Nayak answered.
4 months ago


This QIP is intended to reduce the stake of the promoter, Uday Kotak, to the committed level of 26% by August 2020 as committed to the RBI. Kotak Bank will launch a qualified institutional placement (QIP) of Rs.7500 crore in order to dilute the promoter’s shareholding and comply with the RBI norms. Promoters had taken RBI to court over the mandatory reduction of stake subsequent to which Kotak Bank was given more time to reduce promoter stake. This had also led to Kotak withdrawing the case filed in courts. The floor price for the QIP would be Rs.1147 based on the SEBI formula. The bank has indicated that it may offer a discretionary discount of 5%. The final value of the QIP will depend on the price that is fixed. Kotak Bank will sell a total of 6.5 crore shares and this is expected to bring down Uday Kotak’s stake in the bank from 29.92% to 26%. As per the commitment given to the RBI, Uday Kotak has to reduce his stake to 26% by Aug 18, 2020.