Buffett's Berkshire Hathaway eyes 10% in Kotak Mahindra Bank: CNBC-TV 18
07 December 2018
Warren Buffett’s Berkshire Hathaway is looking to buy 10 per cent stake in Kotak Mahindra Bank, CNBC-TV18 reported on Friday quoting multiple sources. The deal is valued between $4 billion and $6 billion at current market rates, the report added.
The report said Berkshire Hathaway may look at buying promoter stake or a preferential issue as promoter Uday Kotak needs to dilute his stake in the bank to facilitate wider holding, as per Reserve Bank of India (RBI) guidelines.
As per RBI guidelines, Uday Kotak, who currently holds around 30per cent in Kotak Mahindra Bank, needs to reduce his stake to below 20 per cent by December 2018. Promoter shareholding needs to be further brought down to 15 per cent by March 2020.
RBI had, in August, shot down Uday Kotak’s proposal to issue non-convertible perpetual noncumulative preference shares (PNCPS) to a group of investors in order to bring down his stake in the bank to 20 per cent.
"RBI has today communicated to us that our PNCPS issuance does not meet their promoter holding dilution requirement. We continue to believe that we have met the requirement and will engage with the RBI in this behalf," the bank stated on 14 August.
CNBC-TV 18, however, is yet to fully clarify the report and is awaiting response from Berkshire Hathaway. Kotak Mahindra Bank also said it was unaware of any plans by Berkshire Hathaway to buy a stake.
The report was positive for the bank as the Kotak Mahindra Bank stock surged the most in over four years, after the CNBC-TV18 report. The stock had risen as much as 14 per cent to Rs1,345, but pared gains after the clarification.