Kotak Mahindra BankBSE -0.49 % on Tuesday said it planned to raise capital selling shares triggering speculation that it may raise as much as Rs. 10,000 crores for a possible buyout of a non-banking finance company, which may be Mahindra & Mahindra Financial Services Ltd.
While the bank did not disclose the details of the fundraising plan, traders speculated that founder Uday Kotak may be keen to buy the NBFC founded by his friend and business associate Anand Mahindra.
`Kotak Mahindra Bank may announce buying out Mahindra and Mahindra Financial Services in part cash and part stock deal,” said an investment banker based out of Mumbai.
Speculation has been rife that Kotak who bought ING Vysya in 2014, is eager to grow his business through acquisition when valuations are a lot more attractive. A few months ago there were rumours that Kotak has set its sights on buying government-owned around 30 percent stake in Axis Bank. Kotak declined to comment on speculation then.
A Spokesperson of Kotak Mahindra BankBSE -0.49 % said they do not comment on rumour and speculation.
Mahindra and Mahindra Financial Services did not respond to email query.
Kotak who is under regulatory order to reduce his stake to 30% by June 2017, and to an ultimate 20% by December 2018, may go for a stock and cash transaction in any potential acquisition, said, traders.
Mahindra & Mahindra Finance may be an option since the Mahindra group has not been able to make giant strides in lending business unlike its automobile one, may choose to be a part of Kotak Mahindra Bank which has been one of the best performers in the past decade.
Anand Mahindra who helped Uday Kotak with seed capital when the young Kotak was in the early stage of business, recently tweeted “1985- Young Uday Kotak enters my office & offers financing. He’s so smart. I ask if I can invest in him. My Best decision.”
Shares of Kotak Mahindra Bank fell 1.25% from previous close to Rs 859.85 on the Bombay Stock Exchange while Mahindra and Mahindra Financial Services rose 2.83% to Rs 329.30.
Source: Economic Times