Shares of private sector lender Kotak Mahindra Bank fell nearly 4% on news that the Canada Pension Plan Investment Board (CPPIB) plans to sell its share in the bank.
The Canada Pension Plan Investment Board (CPPIB), one of India's largest foreign investors, is planning to sell 4 crore shares in Kotak Mahindra Bank through block sales for almost ₹7,100 crore, TOI reported.
CPPIB is selling the shares at a price range of ₹1,681-1,770 per share, according to the deal's term sheet. The lower end of the band is trading at a 5% discount to Kotak Bank's BSE close of ₹1,768 on Wednesday.
Reacting to the news, Kotak Mahindra Bank shares fell 3.05 percent to 1,714 on the BSE, down from a previous close of 1,767.95. The stock has dropped as much as 3.9 percent in the first hour of trading, hitting a low of 1,699.05. In the last two sessions, it has down 5.7 percent, and in the last week, it has dropped 4.7 percent.
At 01:00 PM, shares of Kotak Mahindra Bank were down 2.17% at ₹1,722.70 on the BSE. Meanwhile, the BSE benchmark Sensex was trading flat at 57,557 levels.
The deal is worth up to ₹4,955 crore and involves 2.8 crore Kotak Bank shares. According to the deal's term sheet, the seller also has the option to sell another 1.2 crore shares for ₹2,137 crore.
The deal is set to be executed through the accelerated book-building process, market players said. Under this process, the broker managing the deal, after the close of the day’s trading, sends out the term sheet to large institutions to express their interest to buy shares from the block on offer.
Once these institutions inform the broker managing the offer, the book for the deal is prepared. After the book is built, the shares change hands the next day on the bourses in large blocks.
On March 2017 Caisse de depot et placement du Quebec (CDPQ), Canada’s second-biggest public pension fund, bought 18.4 million shares in Kotak bank for 817 rupees apiece, data from the BSE stock Exchange showed, Reuters reported
Another largest fund Canada Pension Plan Investment Board (CPPIB), the country’s biggest pension plan, bought 9.2 million shares at 817 rupees each, the data showed.
The stake sale comes after India’s central bank asked the bank’s founders led by Uday Kotak to lower their shareholding to 30 percent by the end-June.
Since the beginning of the calendar year 2022, Kotak Mahindra Bank has delivered a negative return of 6%, while it dropped 15% over a six-month period. In the last one year, the bank’s share fell 4%, while it rose 28% in three years and 95% over the past five years.