In a report Sunday afternoon, Bloomberg said that Kotak is considering a stock acquisition. He also said that the UK-based Hinduja family started the discussion to sell control of the Mumbai-based lender following a dispute between the four brothers over the family’s fortune.
IndusInd promoters currently own less than 15% in IndusInd Bank through IndusInd International Holdings (see chart). Of the remaining 85%, most is in the hands of institutional investors who have seen the bank’s share price drop by more than 60% to Rs 607. prices, the bank has a market capitalization of less than Rs 46 billion.
Against this, Kotak Bank is only 20% below its 52-week high, even after dilution, and has a market capitalization of more than Rs 2.7 lakh crore. A merger at current prices would bring the Hinduja developer’s stake to just over 2%.
An agreement between Kotak and IndusInd would be favorable to the banking regulator, as Kotak Bank has a strong capital base and good asset quality, giving it a high capacity to absorb a smaller bank. Promoter Uday KotakYour bank’s stake has fallen to around 26% after a qualified institutional placement of shares worth Rs 7,442 crore amid the lockdown.
“We have no comments to offer” Kotak Mahindra Group Communications Director Rohit Rao said. IIHL, a Mauritius-based company, denied the Bloomberg reports, stating that it is “malicious, false and without foundation.” The statement said that the Hindus have reiterated their full support for IndusInd Bank, now and forever.
.
