Warren Buffett’s Berkshire May Pick Up Large Stake in Kotak Mahindra Bank, Buzz Lifts Shares to 9-Year High

A man walks past the Kotak Mahindra Bank branch in New Delhi. (Image: Reuters)

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New Delhi: Warren Buffett’s Berkshire Hathaway is in talks for a 10 percent stake buy in Kotak Mahindra Bank valued at between $4 billion and $6 billion. Sources told CNBC-TV18, Berkshire Hathaway is looking to buy promoter stake or via a preferential allotment.

As per RBI guidelines, Uday Kotak needs to dilute his stake to below 20 percent by December 2018. Kotak Mahindra Bank declined to comment for the story. A response from Berkshire Hathaway is awaited.

Uday Kotak had sought RBI’s permission to bring down his stake in the bank to 20 percent from the current 30 percent by selling nonconvertible perpetual noncumulative preference shares (PNCPS) to a group of investors in August 2018. RBI, however, shot down this arrangement.

On August 14, Kotak Mahindra Bank said, “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.”
Shares of the bank posted their sharpest surge in nearly nine years after the news was reported. Kotak shares rose as much as 14 percent to 1,345.950 rupees, their highest since Sept. 3. This was the stock’s sharpest intraday gain since February 2010.

The stock was the biggest contributor to gains on the Nifty, which was up 0.17 percent.