Uday Kotak to sell 2.83% equity to reduce stake as per RBI requirement
Uday Kotak is selling 2.83% equity stake in Kotak Mahindra Bank, through a block deal, for around $900 million to meet the criteria set by the RBI to reduce promoter shareholding to 26% in the bank.
 
Kotak is the promoter of the bank and Managing Director. This will be a 100% secondary placement through an accelerated book-build offering of equity shares. The block deal will take place on June 2, Tuesday.
 
The placement agents are Kotak Securities, Morgan Stanley and Goldman Sachs.
 
The deal size will be up to $900-918 million or Rs68-69,440 crore assuming deal size of 56 million equity shares or up to 2.83% of total equity shares outstanding as of May 31, 2020.
 
Uday Kotak, as the promoter, is selling the stake. The pre-holding of the promoter group is 28.93% which will be reduced to 26.10% post the block deal.
 
The deal objective of the sale of equity shares by Uday Suresh Kotak is to assist the Bank to progress towards compliance with Reserve Bank of India's requirement to reduce promoters' shareholding in the Bank to 26% of its paid up voting equity share capital by August 17, 2020.
 
The floor price is Rs1,215-1240 per equity share. The discount range will be 0.7% discount (at top end of offer price range) and 2.7% discount (at floor price) to the close price of Rs1,248.40 as on June 1 on the National Stock Exchange of India.
 
The discount range will be 1.5% discount (at top end of offer price range) and 3.5% discount (at Floor Price) to the VWAP price of Rs1,258.48 as on June 1, 2020 on the National Stock Exchange of India.
 
The lock up stipulation is that the seller will not sell equity shares of the Bank for 60 days from May 29, subject to such restriction not being applicable on sale of equity shares of the bank by one or more members of the promoter group of the bank that progress towards the RBI's requirement to reduce the current promoter shareholding in the bank to 26% of the paid-up voting equity share capital of the company.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
  • Like this story? Get our top stories by email.

    User 

    SEBI Invites Comments on Social Stock Exchange-SSE for Listing Social Enterprises, NGOs
    Market regulator SEBI has invited comments from public on a report on Social Stock Exchange-SSE for listing social enterprise and voluntary organisations. 
     
    Following the announcement in the Budget, SEBI had formed a working group on SSE headed by Ishaat Hussain and consisting of representatives of the stakeholders active in the space of social welfare, social impact investing, representatives from ministry of finance, the stock exchanges and non-government organisations (NGOs). 
     
    SEBI says, "Social Stock Exchange-SSE is a novel concept in India. The working group had a series of consultation with various stakeholders including voluntary organisations, social enterprises and philanthropic organizations in order to assess the difficulties faced by them in raising funds and donating funds."
     
    Here are key recommendations submitted by the working group...
    • Non-profit organizations can directly list on SSE through issuance of bonds. 
    • A range of funding mechanisms have been recommended including some of the existing mechanisms such as Social Venture Funds (SVFs) under the Alternative Investment Funds. 
    • A new minimum reporting standard has been proposed for organizations which would raise funds under SSE. 
    • For-profit social enterprises can also list on SSE with enhanced reporting requirements.
    • To encourage "giving" culture, some tax incentives have also been recommended.
     
     
    SEBI says, public can send comments email to Yogita Jadhav, DGM ([email protected]) and Abhishek Rozatkar, AGM ([email protected]) by 30 June 2020.
  • Like this story? Get our top stories by email.

    User 

    COMMENTS

    tillan2k

    1 month ago

    do not permit buy back of shares by Companies like ESSAR or Adani borrowing to buy is unethical if group wants to buy back to delist make profit and then list like DLF it is not fair to large number of small share holders. pl intervene to stop disguised and deceitful practices by crony capitalists..
    pl ask multi baggers to totally separate the regulated and non regulated business and use regulated capex to invest in non regulated business. for better appreciation analyse the balance sheet of multibaggers like Torrent power, CESC , Adani, ESAAR . Tata Power analyse the balance sheet before they entered power sector and after plants were commissioned , analyse ratios, like return on assets, ROE for more analyses study Security Exchange Commission ( SEC USA ) and their hard regulation of power companies in (1935- 40 depression )

    Ramesh Popat

    1 month ago

    good news for MLF!?!

    Investments Rules of VRR Scheme Relaxed for 3 Months To Help Foreign Investors Manage Their Investments Better
    To attract long-term and stable foreign portfolio investments (FPI) into the Indian debt markets, the Reserve Bank of India (RBI) introduced the voluntary retention route (VRR) in March 2019. However, the current volatile market scenario amid the coronavirus (COVID-19) crisis has made the investors risk averse. As foreign investors are pulling their investments out of the Indian markets and switching over to safer havens, it is unreasonable to expect the FPIs to comply with the requirement of investing a minimum 75% of the committed portfolio size within three months from the date of the allotment of investment limits under the VRR scheme. 
     
    Investments through this route are in addition to the FPI general investment limits, provided FPIs voluntarily commit to retain a minimum of 75% of its allocated investments (called the committed portfolio size or CPS) for minimum three years (retention period). However, such 75% of CPS shall be invested within 3 months from the date of allotment of investment limits.
     
    Recognizing the disruption posed by the COVID-19 pandemic, RBI vide circular dated May 22, 2020 (https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=11896&Mode=0), has granted additional three-months relaxation to FPIs for making the required investments. The circular further addresses the questions as to which all FPIs are covered under this relaxation and how the retention period will be determined.
     
    This article discusses the features of the VRR scheme and the implications of RBI’s circular in brief. 
     
    What Is ‘Voluntary Retention Route’?
     
    RBI, to motivate long term investments in Indian debt markets, launched a new channel of investment for FPIs on 1 March 2019  (subsequently the scheme was amended on 24 May 2019 (https://www.rbi.org.in/Scripts/BS_CircularIndexDisplay.aspx?Id=11561), free from the macro-prudential and other regulatory norms applicable to FPI investment in debt markets and providing operational flexibility to manage investments by FPIs. Under this route, FPIs voluntarily commit to retain a required minimum percentage of their investments for a period of at least three years.  
     
    The VRR scheme was further amended on 23 January 2020 , widening its scope and provides certain relaxations to FPIs. 
     
    Key Features of the VRR Scheme: 
     
    1. The FPI is required to retain a minimum of 75% of its committed portfolio size for a minimum period of three years.
     
    2. The allotment of the investment amount would be through tap or auctions. FPIs (including its related FPIs) shall be allotted an investment limit maximum up to 50% of the amount offered for each allotment, in case there is a demand for more than 100% of amount offered.
     
    3. FPIs may, at their discretion, transfer their investments made under the General Investment Limit, if any, to the VRR scheme.
     
    4. FPIs may apply for investment limits online to Clearing Corp of India Ltd (CCIL) through their respective custodians.
     
    5. Investment under this route shall be capped at Rs1,50,000 crore (erstwhile Rs75,000 crore) or higher, which shall be allocated among the following types of securities, as may be decided by the RBI from time to time.
     
    a. VRR-Corp’: voluntary retention route for FPI investment in corporate debt instruments.
    b. VRR-Govt’: voluntary retention route for FPI investment in government securities.
    c. ‘VRR-Combined’: voluntary retention route for FPI investment in instruments eligible under both VRR-Govt and VRR-Corp.
     
    6. Relaxation from (a) minimum residual maturity requirement, (b) Concentration limit, (c) Single/Group investor-wise limits in corporate bonds as stipulated in RBI Circular dated 15 June 2018 where exposure limit of not more than 20% of corporate bond portfolio to a single corporate (including entities related to the corporate) have been dispensed with.
     
    However, limit on investments by any FPI, including investments by related FPIs, shall not exceed 50% of any issue of a corporate bond except for investments by multilateral financial institutions and investments by FPIs in exempted securities. 
     
    7. FPIs shall open one or more separate special non-resident rupee (SNRR) account for investment through the Route. All fund flows relating to investment through the VRR shall reflect in such account(s).
     
    What are the eligible instruments for investments?
     
    1. Any government securities i.e., Central government dated securities (G-Secs), treasury bills (T-bills) as well as state development loans (SDLs);
     
    2. Any instrument listed under schedule 1 to Foreign Exchange Management (Debt Instruments) Regulations, 2019 other than those specified at 1A(a) and 1A(d) of that schedule; However, pursuant to the recent amendments, investments in Exchange Traded Funds investing only in debt instruments is permitted.
     
    3. Repo transactions, and reverse repo transactions.
     
    What are the options available to FPIs on the expiry of retention period?
     
     
    Any FPI wishing to exit its investments, fully or partly, prior to the end of the retention period may do so by selling their investments to another FPI or FPIs.
     
    3-months investment deadline extended in view of COVID-19 disruption
     
    As discussed above, once the allotment of the investment limit has been made, the successful allottees shall invest at least 75% of their CPS within three months from the date of allotment. While announcing various measures to ease the financial stress caused by the COVID-19 pandemic, the RBI governor acknowledged the fact that VRR scheme has evinced strong investor participation, with investments exceeding 90% of the limits allotted under the scheme. 
     
    Considering the difficulties in investing 75% of allotted limits, it has been decided that an additional three months will be allowed to FPIs to fulfill this requirement. 
     
    Which all FPIs shall be considered eligible to claim the relaxation? 
     
    FPIs that have been allotted investment limits, between 24 January 2020 (the date of reopening of allotment of investment limits) and 30 April 2020 are eligible to claim the relaxation of additional three months.
     
    When does the retention period commence? What will be the implication of extension on retention period?
     
    The retention period of three years commence from the date of allotment of investment limit and not from date of investments by FPIs. However, post above relaxation granted, the retention period shall be determined as follows:
     
     
    *Unqualified FPIs - whose investments limits are not allotted b/w 24.01.2020 and 30.04.2020
     
    **Qualified FPIs to relaxation - whose investments limits not allotted b/w 24.01.2020 and 30.04.2020 
     
    What will be the consequences if the required investments not made within extended period of three months?
     
    Since no separate penal provisions are prescribed under the circular, in terms of VRR Scheme, any violation by FPIs shall be subjected to regulatory action as determined by SEBI. FPIs are permitted, with the approval of the custodian, to regularize minor violations immediately upon notice, and in any case, within 5 working days of the violation.
     
    Custodians shall report all non-minor violations as well as minor violations that have not been regularised to SEBI
     
    Concluding Remarks
     
    The COVID-19 disruption has adversely impacted the Indian markets where investors are dealing with the market volatility. Given this, FPIs are pulling out their investments from the Indian markets (both equity and debt). Thus, relaxing investments rules of VRR Scheme during such financial distress, will help the foreign investors manage their investments appropriately. 
  • Like this story? Get our top stories by email.

    User 

    COMMENTS

    rajuvazirani

    4 weeks ago

    How under RBI fraud take place ?what type of Auditing & supervision done by RBI,when they can not detect fraud ,then what for So much salary is given to its employees.It is complete failure of RBI.Now Sr citizens are going to file case of torture in court.

    We are listening!

    Solve the equation and enter in the Captcha field.
      Loading...
    Close

    To continue


    Please
    Sign Up or Sign In
    with

    Email
    Close

    To continue


    Please
    Sign Up or Sign In
    with

    Email

    BUY NOW

    online financial advisory
    Pathbreakers
    Pathbreakers 1 & Pathbreakers 2 contain deep insights, unknown facts and captivating events in the life of 51 top achievers, in their own words.
    online financia advisory
    The Scam
    24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
    Moneylife Online Magazine
    Fiercely independent and pro-consumer information on personal finance
    financial magazines online
    Stockletters in 3 Flavours
    Outstanding research that beats mutual funds year after year
    financial magazines in india
    MAS: Complete Online Financial Advisory
    (Includes Moneylife Online Magazine)
    FREE: Your Complete Family Record Book
    Keep all the Personal and Financial Details of You & Your Family. In One Place So That`s Its Easy for Anyone to Find Anytime
    We promise not to share your email id with anyone