Kotak Mahindra not averse to buying Axis Bank stake

Talk of Kotak Mahindra Bank looking to buy Axis Bank got fresh impetus on Wednesday, when Kotak managing director Uday Kotak expressed interest in acquiring the 12-per cent stake in Axis Bank held by the Specified Undertaking of Unit Trust of India if he is approached for such a sale.

''If SUUTI decides to offer, our board will look at the merit and evaluate it,'' said Kotak in an interview to The Times of India.

The expectation of Kotak Mahindra Bank announcing a big acquisition has been high as Kotak has to reduce his promoter stake in the bank to 30 per cent by the June quarter as mandated by the Reserve Bank of India, and this stake has to be brought down further to 20 per cent by December 2018.

The bank also recently announced a fund-raising plan of Rs5,370 crore for FY18.

Axis Bank has strongly denied any talks of a merger with Kotak. The bank has been under pressure after a sharp fall in its third-quarter profits and multiple income-tax raids across some of its branches following demonetisation.

There had also been rumours about Axis Bank chief executive officer Shikha Sharma's resignation before her term comes to end in 2018. The bank denied these rumours. ''The news appearing in section of social media stating the impending resignation of the MD & CEO of the Bank, which please note is false, speculative and is being circulated with the mala fide intention of misleading the investors and the general public,'' Axis Bank said in a clarification to the BSE.

The Life Insurance Corporation of India is a big shareholder in Axis with a 14-per cent stake.

The shares of Kotak Mahindra Bank and Axis Bank have surged ever since the buzz about acquisition came about. So far this year, Kotak shares have gained 22.2 per cent and Axis Bank shares 12 per cent, Mint reports.