Home / Companies / People /  Canada Pension Plan buys stake in Kotak Mahindra Bank

Mumbai: Japan’s Sumitomo Mitsui Banking Corp. on Tuesday sold a large part of its stake in Kotak Mahindra Bank Ltd to Canada Pension Plan Investment Board (CPPIB) that manages pension fund assets worth 268.6 billion Canadian dollars (US$203.09 billion), according to two people aware of the development.

On Monday, Mint reported that Sumitomo was looking to sell almost half its stake in the private sector lender for around $300 million ( 2,050 crore).

The Canadian pension fund has bought 18.1 million shares (approximately 1% stake of the firm) at 636.25 per share, aggregating to 1,151.60 crore, according to data available with the stock exchanges.

As of 31 December, Sumitomo held a 3.58% stake in the private sector lender, while CPPIB held about 3.91%, data from the stock exchanges show.

“The book was opened last evening. CPPIB has bought the largest chunk of shares on offer. Some foreign institutional investors have also picked up stakes," said one of the persons mentioned above, requesting anonymity.

Domestic institutions did not participate in the share sale, he added.

Shares were offered to buyers in the price range of 611.34 to 636.55 per share, according to Bloomberg.

Citigroup Inc. is managing the share sale programme. After the transaction, Sumitomo’s stake in Kotak Mahindra Bank will fall to around 1.79%.

The Japanese bank had picked up a 4.5% stake in Kotak Mahindra Bank in 2010 through a preferential allotment for 1,366 crore.

Apart from its investment in Kotak Mahindra Bank, CPPIB has invested in infrastructure, real estate and private equity (PE) firms in India.

CPPIB’s exposure to the Indian infrastructure sector is through a 2,000 crore investment in L&T Infrastructure Development Projects Ltd (L&T IDPL), which was announced in December 2014.

In the real estate sector, the pension fund has partnered with the Shapoorji Pallonji Group and Piramal Enterprises Ltd.

Apart from investing through partnerships, the pension fund also backs domestic PE funds in its capacity as a limited partner (LP).

CPPIB has till date committed $300 million to Renuka Ramnath-led Mulltiples Alternate Asset Management Pvt. Ltd across its two funds.

It has also committed $75 million to India Value Fund Advisors.

On Tuesday, shares of Kotak Mahindra Bank closed 637.75, up by 1.19%, on the BSE while the benchmark Sensex ended the day at 23,779.35 points, up 3.38%.

Swaraj Singh Dhanjal
" Based in Mumbai, Swaraj Singh Dhanjal is responsible for Mint’s corporate news coverage. For the past eight years he has been writing on the biggest deals in private equity, venture capital, IPO market and corporate mergers and acquisitions. An engineer and an MBA, he started his journalism career in 2014 with Mint. "
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