Kotak Mahindra Bank to sell 4.5 per cent stake to Japan's Sumitomo Mitsui

Private sector Kotak Mahindra Bank will sell a 4.5 per cent stake to Japan's Sumitomo Mitsui Financial Group for Rs1,366 crore ($296 million). The sale will be carried out through a preferential issue of shares to Sumitomo Mitsui Banking Corporation.

Sumitomo Mitsui Financial Group, third largest bank in Japan, is stepping up efforts to expand overseas.

In a communication to the Bombay Stock Exchange (BSE), Kotak Mahindra Bank said its board of directors at its meeting on 29 June, approved, preferential issue of 1,64,00,000 equity shares of Rs10 each at a price of Rs833 per share aggregating to Rs1,366 crore to Sumitomo Mitsui Banking Corporation.

Upon completion of the proposed preferential issue and allotment of equity shares to SMBC, the shareholding of SMBC in the Kotak Mahindra Bank will be approximately 4.5 per cent of the emerging share capital, according to the stock market filing.

The preferential issue is subject to the consent of the shareholders at a general meeting and such other requisite statutory approvals, Kotak Mahindra Bank said.

In May 2010 the board of directors of Kotak Mahindra Bank had approved a sub-division of its shares and the proposal is yet to receive necessary approvals. In the event of the proposed sub-division of shares becoming effective prior to the allotment of shares to SMBC, the number of shares to be allotted to SMBC will double and the price per share will be halved, the release added.