Kotak Bank to raise ₹7,500 cr via QIP1 min read . Updated: 26 May 2020, 10:27 PM IST
QIP is a tool used by listed companies to sell shares or other securities, which are convertible into stocks, to qualified institutional buyers such as mutual funds
MUMBAI : Kotak Mahindra Bank on Tuesday launched its qualified institutional placement (QIP) offering to raise up to ₹7,500 crore.
QIP is a tool used by listed companies to sell shares or other securities, which are convertible into stocks, to qualified institutional buyers such as mutual funds.
This is the first QIP since Avenue Supermarts Ltd, which runs supermarket chain DMart, raised ₹4,098 crore in February.
The bank said that it has set a floor price of ₹1,147.75 per share for the offering. As per Securities and Exchange Board of India (Sebi) norms, the bank can offer a maximum discount of up to 5% on the floor price to investors. On Tuesday, Kotak’s shares closed trading at ₹1,152.45, down 0.67% on BSE.
Investment banks Goldman Sachs, Morgan Stanley, Kotak Mahindra Capital and SBI Capital Markets are advising Kotak Mahindra Bank on the deal.
The bank will use the proceeds to bolster its balance sheet as covid-19 is expected to lead to asset quality issues as well as to tap opportunities arising out of the crisis.
“Subject to applicable laws and regulations, our Bank intends to use the Net Proceeds to augment its capital base and strengthen its balance sheet, which would assist our Bank in dealing with contingencies or financing business opportunities (which may be organic or inorganic), or both, which may arise pursuant to the economic events driven by the outbreak of covid, or otherwise," the bank said in its draft offer document.
Mint reported on 13 May that Kotak Mahindra Bank posted a 10% year-on-year drop in net profit in the March quarter to ₹1,266 crore due to higher provisioning. Profit stood at ₹1,407 crore in the corresponding period a year ago.
Provisions and contingencies surged to ₹1,047.47 crore in the quarter from ₹171.26 crore a year ago. General provision for covid-19 stood at ₹650 crore, while the provision towards advances/others (including provisions for exposures to entities with unhedged foreign currency exposures) was ₹3,73.72 crore.
Asset quality improved with gross non-performing assets seeing a decline of 7% quarter on quarter to ₹5,026.9 crore at the end of March. Gross NPA as a percentage of total assets stood at 2.3% as on 31 March as against 2.5% in the previous quarter. The bank added fresh bad loans worth ₹491 crore in the March quarter compared to ₹1,062 crore in the December quarter.